Dell predicts return to growth

Executives at Dell, the world’s second-biggest PC maker, on Thursday predicted a return to growth in the second half of this year, with a solid rebound in corporate spending that underpins much of the tech industry looking increasingly likely for 2010.

The comments, which echoed the cautious optimism that has become increasingly apparent among other big tech companies, came after Dell had mistakenly posted its latest quarterly results on its website early, leading to confusion on Wall Street.

Though not due to be released until the stock market had closed for the day, the figures were posted nearly half an hour early and prompted a frantic rally in Dell shares in the final minutes of trading, driving them up nearly 7 per cent.

Brian Gladden, chief financial officer, acknowledged the error and said it was looking into the cause of the mistake.

Dell’s predictions for an end to the recent sales slump amount to some of the most optimistic comments recently from the tech world, and stand in contrast to the more sober recent views from bigger rival Hewlett-Packard.

Michael Dell, chief executive, said that the increasing age of PCs used by many companies, and the coming launch of new generations of technology from Intel and Microsoft, had increased the likelihood of a rebound in 2010. “When we look ahead we see a fairly powerful product cycle,” he said.

In the shorter term, Dell predicted a slower and more uncertain recovery, though it claimed that the worst effects of the sales slump lay in the past.

“We continue to see a very challenging environment, though we do see it stabilising and some pockets of strong demand,” said Mr Gladden. He added that sales in the
second half of the company’s fiscal year, which began this month, are expected to be stronger than the first half.

Mr Dell said a noticeable pick-up in sales that began in July had continued in August. Overall, the company’s sales rose 3 per cent compared with the first three months of the year, with US and Asian markets leading the recovery. The company also made further headway with its cost-cutting plans and maintained its gross margins at more than 18 per cent of sales.

Compared with a year before, Dell said revenues fell 22 per cent in the latest quarter, to $12.76bn, though they exceeded Wall Street expectations. Net income dropped 23 per cent to $472m, or 24 cents a share.

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