NEW YORK – Dell Computer Corp., the No. 1 personal computer maker, on Thursday said it would take a $700 million charge in the second quarter for job cuts and other items, and that its revenues would meet the low end of its earlier estimates.
Round Rock, Texas-based Dell also said it expected a profit of 16 cents in its fiscal second quarter ending Aug. 3, in the middle of a range of 15 cents to 17 cents that it gave following its first quarter earnings release in May.
The charge roughly doubles the hit Dell said it expected in May, when it announced it would take a one-time pretax charge of $250 million to $350 million against its second quarter earnings, primarily for cuts of between 3,000 and 4,000 jobs and facilities consolidation.
Dell said the larger charge was due to the writing down of some assets, including investments by its venture capital arm, Dell Ventures.
Dell said the company expected to post revenues of $7.6 billion, at the low end of a range of $7.6 billion to $7.76 billion the company gave in May.
Shares of Dell rose $1.04, or 3.8 percent, to $28.24 in early trade on the Nasdaq, as investors reacted positively to the news that the company's profits would meet Wall Street estimates.
``You don't have a lot of hardware companies making their numbers right now,'' said Goldman Sachs computer hardware analyst Joe Moore. ``The fact that they were able to be precise about a quarter that has still got two weeks to go has got to make people comfortable.''
Dell has promised to be ruthless on cost control, as the personal computer market faces sluggish demand and a full-out price war. Worldwide sales of PCs are expected to be either flat or as much as 3 to 5 percent down from the first quarter.
Dell's direct sales model, which allows it to pass on falling component prices to its customers, is widely seen as giving the company the upper hand against its rivals even as overall PC demand weakens.
Dell, which took the top PC maker spot from Compaq Computer Corp. this year, plans to release full second-quarter results and provide third-quarter guidance on August 16.