Dell feels ill effects of weak economy

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In a week already filled with financial doom and gloom Dell added to the doom saying by suggesting that its customers are reacting with their wallets and streamlining technology spending more so than ever.

Following the announcement today - ahead of Dell executives speaking at the Bank of America’s 38th Annual Conference in San Francisco - the computer maker's shares fell by more than 7 per cent.

This isn’t the first time the company has been burned by economic uncertainty. Back in August, it was hit by a steep drop in second quarter profit. Further belt-tightening was also evident by Dell itself who announced it cut some 8,500 jobs out of a planned 8,900.

“When Dell announced Q2 financial results…, it reported continued conservatism in IT spending in the US, which had extended into Western Europe and several countries in Asia. The company is seeing further softening in global end-user demand in the current quarter,” Dell said in a statement issued on its website today.

“The company expects to incur costs as it realigns its business to improve competitiveness, reduce headcount and invest in infrastructure and acquisitions, but is committed to working aggressively on cost initiatives that will benefit its P&L over time with improved growth, profitability and cash flow. The company grew unit shipments faster than the industry in the first half of calendar 2008 and expects to grow faster than the industry for the full year.”

Dell’s third quarter results are due on 20 November.

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