Dell has disclosed that year-over-year demand for its information-technology products appears to have stabilised, and that it expects to report a slight sequential revenue increase in its fiscal second-quarter 2010, which ends July 31.
The company also anticipates a modest decline in Q2 gross margins, due to the higher component costs, competitive pricing environment, and an unfavourable mix of product and business-segment demand.
A day in advance of a Tuesday meeting in Austin, while talking to securities and industry analysts, Brian Gladden, chief financial officer of the company, said that though demand for its products and services seems to have stabilised, it varies by customer segment and geography.
He added that Dell remains focused on optimising liquidity, profitability and growth in the midst of a still-challenging operating environment, and is on course to reduce annual costs by more than $4 billion by the end of fiscal 2011. Reductions are expected to come from design and procurement, optimisation of manufacturing and supply chain logistics, and ongoing reductions in operating expenses.
The company stated that, over a longer time horizon, it will be targeting 5 to 7% compounded annual sales growth, operating income at or above 7% of revenue, and cash flow from operations exceeding net income. However, such results are dependent on global economic improvement accompanied by worldwide IT spending, including a double-digit growth rate in demand for computer systems.
Gladden further said: “We continue to believe that customers are deferring IT purchases, and that we will see demand return to more typical levels at some point. In the meantime, we continue focusing our energy and resources on the operating initiatives that will improve the company, and position us for future success.”
