DALLAS -- Dell Inc.'s quarterly income disappointed Wall Street for a second straight quarter Thursday as the world's largest personal computer maker saw its income dip 28 percent on repair and restructuring charges.
Net income fell to $606 million, or 25 cents per share, in the third quarter, from $846 million, or 33 cents per share, in the same period last year. The quarter's results were hurt by $442 million in charges Dell took to repair a faulty computer component and costs related to restructuring.
"We are not a company that takes charges," Chief Executive Kevin Rollins said. "We are not pleased about that."
Operating income was $754 million, or 39 cents per share, matching analysts' reduced expectations of 39 cents, according to Thomson Financial.
Dell said sales came in at a company record of $13.9 billion, up 11 percent from last year's $12.5 billion but below its previous forecast range of $14.1 billion to $14.5 billion. Analysts had forecast $14.3 billion for the quarter ended Oct. 28.
Round Rock, Texas-based Dell had already warned investors, saying Oct. 31 that third-quarter earnings would be on the low end.
It blamed weaker-than-expected demand in certain markets and the hefty charge, equal to 14 cents per share, to fix a faulty computer part and to cover severance packages for an undisclosed number of workers whose jobs were eliminated in moves to consolidate the company.
Rollins said the quarter saw Dell fine tuning its direct-sales model to provide a better balance of products and prices, which he believes will lead to more sustainable growth. The consolidation, meanwhile, is part of a plan to cut costs and make Dell a leaner, more profitable company, he said.
"We think we can manage those costs back into shape," he said.
The bulk of the charge, $300 million, was to fix bad capacitors on older OptiPlex business desktop PCs.
Dell missed analysts' earnings targets by $300 million in the second quarter. Executives blamed it on overly aggressive price cuts and U.S. consumers who stuck with cheap, low-end desktops and laptops instead of upgrading to more expensive models.
In the third quarter, desktops accounted for 37 percent of Dell's revenue, followed by 26 percent from laptops and other mobile products.
