March 1, 2008 in Business

As profits fall, Dell banks on savings plan

From Wire Reports The Spokesman-Review
 

Dell Inc. executives say it’s too early to judge the success of their latest push into the consumer PC market, but the computer maker’s latest financial results show that the company has a long way to go to restore its golden image on Wall Street.

Dell, the world’s No. 2 PC maker, promises an aggressive cost-cutting campaign – more layoffs on top of the 3,200 jobs already eliminated in the past year – to boost profits.

And it is counting on growth in emerging markets to offset softness in the United States, where customers such as financial-services firms are reining in spending on technology.

“I wouldn’t be surprised if the U.S. is our slowest-growing region certainly for the next couple of quarters, given what we see going on in the economy,” said founder and chief executive Michael Dell.

The company said Thursday that its fourth-quarter profit dropped 6.4 percent, to $679 million or 31 cents a share, in the quarter that ended Feb. 1. That included several one-time expenses totaling 7 cents a share and gains of 4 cents a share.

Sales rose 10.5 percent to $15.99 billion, but that was below the $16.27 billion that analysts had expected.

Dell shares rose 10 cents to $20.97 at the open of trade Friday.

•State Farm Insurance, the nation’s largest insurer, said Friday its profit rose 3 percent last year on the strength of higher auto policyholder dividends despite a steep decline in property-casualty underwriting.

The company said nearly half of the 79 percent drop in underwriting, to $621 million from $3 billion in 2006, was due to a fourth consecutive year of auto rate decreases.

Overall, State Farm said net income edged up to $5.46 billion in 2007 from $5.32 billion a year earlier. It was the fifth straight profitable year for the insurer after significant losses in 2001-02.

Total revenue increased 1.8 percent to $61.6 billion from $60.5 billion.

Bloomington, Ill.-based State Farm is a privately held mutual company owned by its policyholders. Its holdings include auto, property, health and life insurance companies, as well as banking and mutual fund operations.

•Volkswagen AG, Europe’s biggest automaker, said Friday that its profit climbed about 50 percent in 2007 as it sold a company record of almost 6.2 million cars worldwide.

The Wolfsburg, Germany-based company said it expects to beat the sales total this year.

Volkswagen earned 4.12 billion euros ($6.2 billion) last year, compared with 2.75 billion euros in 2006. That beat the 3.9 billion euros ($5.92 billion) that analysts polled by Dow Jones Newswires had forecast.

Its sales rose almost 4 percent to 108.9 billion euros ($165.2 billion) from 104.8 billion euros in 2006. Analysts expected sales of 109.8 billion euros ($166.5 billion).

Volkswagen, whose brands include Audi, Skoda, Seat, Lamborghini and Bentley, said it sold just below 6.2 million cars in 2007, up almost 8 percent from the 5.7 million sold in 2006.

Shares of Volkswagen rose 0.03 percent to 149.99 euros ($227.49) in trading Friday in Frankfurt.


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