Dell profit falls; 8,000 layoffs set

DALLAS - Dell Inc. said yesterday that earnings fell slightly in preliminary first-quarter results, and the computer-maker planned to lay off more than 8,000 employees over the next year as part of an ongoing restructuring.

Dell said it earned $759 million, or 34 cents a share, in the three months ended May 4. That compared with $762 million, or 33 cents a share, in the year-ago period.

First-quarter sales rose nearly 1 percent from the year-ago period to $14.6 billion.

Analysts, on average, had expected earnings of 26 cents a share on sales $13.95 billion, according to a poll by Thomson Financial.

Dell shares climbed almost 6 percent after the results were released.

Earnings statements for Dell, of Round Rock, Texas, from the second, third and fourth quarters also remain preliminary and have yet to be filed with the Securities and Exchange Commission because of an ongoing federal accounting probe that found numerous errors, evidence of misconduct, and financial-control deficiencies.

Yesterday's report included a charge of $46 million, or 2 cents a share, for costs related to the investigation.

Thomas W. Luce III, chairman of Dell's internal audit committee, said: "Although this process has taken us longer than we would have liked, it is important to commit the time and resources required to ensure a thorough and comprehensive review and resolution of all identified issues and the implementation of appropriate remedial measures."

Without offering a timetable, Dell spokesman David Frink said the probe was in its final phases.

The layoffs come as Dell struggles to regain market share after Hewlett-Packard Co. ousted it from the top spot in worldwide computer shipments last year.

As part of an ongoing turnaround effort led by founder Michael Dell, the company has undergone an executive shake-up and numerous other changes to improve customer service and reclaim market share.

A company of Dell's size is bound to shed jobs in order to cut costs, but the savings from any layoffs likely won't improve the company's finances until next year at the earliest, said Philip Durell, senior analyst at the Motley Fool.

"It's certainly going to make Dell leaner," he said. "This is just part of their review of their whole operation."

Last month, Dell broke from its long-standing direct-to-customer business model with a plan to sell computers through Wal-Mart Stores Inc., the world's largest retailer, beginning June 10. Dell also recently began selling consumer systems pre-loaded with a version of Linux.

Dell shares rose $1.61 to $28.52 at one point in extended trading yesterday on the Nasdaq Stock Market.