Dell hints at green shoots

Vendor expecting a slight sequential increase in second quarter turnover

Dell appeared cautiously optimistic in its most recent financial statement, claiming demand seems to have "stabilised".

Speaking ahead of a meeting with securities and industry analysts today, Brian Gladden, chief financial officer of Dell, hinted that the vendor expects to report a slight sequential revenue increase for its fiscal second quarter 2010, ending 31 July.

Dell is also expecting a "modest" decline in Q2 gross margins, due to higher component costs, a competitive pricing environment and what it terms an " unfavourable mix of product and business-segment demand".

He said that Dell remains focused on "optimising liquidity, profitability and growth in the midst of a still-challenging operating environment". The vendor is also "on course" to reduce annual costs by over $4bn (£2.5bn) by the end of fiscal 2011.

“We continue to believe that customers are deferring IT purchases, and that we will see demand return to more typical levels at some point,” Gladden said. “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.”

Looking ahead, Dell also revealed that it will be targeting five to seven per cent compounded annual sales growth, operating profit at or above seven per cent of revenue, and cash flow from operations to exceed net profit.

In a blog on Dell’s site, Robert Williams, director of investor relations at Dell, said: “It's important to point out that such results are dependent on broad global economic improvement accompanied by higher worldwide IT spending, including sustained double-digit growth rate in demand for computer systems.”