Dell Profit Rises; Company Plans to Lay Off 10% of Work Force

Dell said that earnings rose 8% in preliminary first-quarter results, and the computer maker plans to lay off about 8,000 employees over the next year as part of an ongoing restructuring.

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[DELL  Loading...      ()   ] said it earned $947 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% from the year ago period to $14.6 billion.

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

Dell's strong numbers helped fuel a broad rally in the stock market.

In what has become a trend in recent quarters, Dell released the financial results as a news release and didn't offer any follow-up conference calls with analysts and reporters. The company didn't provide year-ago figures in its report.

Round Rock, Texas-based Dell's earnings statements 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.

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

Dell also hasn't filed its annual report for the fiscal year ended Feb. 2.

Thomas W. Luce III, chairman of the Dell's internal audit committee, conceded that the investigation was taking longer than expected.

"Although this process has taken us longer than we would have liked," Luce explained, "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."

The layoffs, which represent 10% of Dell's global work force of 88,100, come as Dell struggles to regain market share after Hewlett-Packard ousted it from the top spot in worldwide computer shipments last year.

In the first quarter, HP kept its lead over Dell with about 4% more shipments, according to tech research firms IDC and Gartner Inc.

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

"While reductions in head count are always difficult for a company, we know these actions are critical to our ability to deliver unprecedented value to our customers now and in the future," Dell said in a statement.

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