Dell's profits down 5% as fewer people buy PCs

DALLAS -- PC maker Dell Inc. said late Thursday its third-quarter profit fell 5 percent as businesses around the world bought fewer computers and other technology products.

Dell's earnings dipped to $727 million in the quarter that ended Oct. 31, down from $766 million a year ago. However, earnings per share rose 9 percent from last year, as Dell bought back shares, slashed operating expenses and improved margins. Earnings were better than analysts were expecting.

Sales slipped 3 percent to about $15 billion, shy of analyst expectations for $16.2 billion, dragged down by slower spending by corporations. In the Americas, Dell's largest region for sales to businesses, revenue dropped 8 percent. Dell's sales grew at a reasonable pace in August, but fell off in September and October, Chief Financial Officer Brian Gladden said during a conference call.

"We expect the challenging environment to continue," Gladden said.

Retrenching as it tries to deal with the economic uncertainty, Dell has been on a cost-cutting campaign. The Round Rock, Texas-based company eliminated 2,200 jobs in the quarter and has slashed about 9 percent of its work force in the past year. CEO Michael Dell said the company would continue to aggressively cut costs, and choose stronger profits over grabbing market share from its competitors by lowering prices.

Shares of Dell jumped 5 percent to $10.30 in extended trading after the earnings report was released.