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Dell predicts recovery in 2010

Simon Quicke

Dell expects customers to start spending next year as the market moves from its current stabilisation to recovery, but the PC maker has held back from stating that the market has reached the bottom.

The views of the supplier's senior management about the state of the market came at the announcement of its Q2 results which surprised market watchers with revenue and net income holding up better than expected.

Compared to 2009 revenue was down 22% to $12.8bn and net income fell by 23% to $472m. But underneath those declines there were signs of improvement with shipments increasing by 10% and revenue was up 3% from the fiscal first quarter.

Large enterprise business remained depressed with a 32% decline on the Q2 a year earlier, SME business was down 29% and the consumer operation saw a 9% drop compared to the fiscal 2009 results.

Dell benefited from a cost cutting programme and has seen growth in the emerging markets of Brazil, India, Russia and China.

Michael Dell, chairman and CEO of Dell, said that the firm had been successful in cutting costs and anticipated a recovery in IT spending. "If current demands trends continue, we expect revenue for the second half of the year to be stronger than the first half," he said.

He added that Dell was investing in its enterprise and services businesses and the vendor is expecting strong public sector business in the third quarter.

"Dell believes a refresh cycle in commercial accounts is more likely to occur in 2010, with IT spending improving first in the US. The company continues to see pressure in the form of component costs and areas of aggressive pricing in the near term, and continues to take actions to offset these items. The company will continue to focus on implementing cost improvements and strategic investments to improve operations for the long term," Dell said.


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