Dell's earnings dipped to US$727 million (S$1.1 billion) in the quarter that ended Oct 31, down from US$766 million a year ago. However, earnings per share rose 9 per cent from last year to 37 cents per share, as Dell bought back shares, slashed operating expenses and improved margins.

Earnings were 6 cents better than analysts were expecting, according to a Thomson Reuters poll.

Sales slipped 3 per cent to about US$15 billion, shy of analyst expectations for US$16.2 billion, dragged down by slower spending by corporations. In the Americas, Dell's largest region for sales to businesses, revenue dropped 8 per cent.

Dell's sales grew at a reasonable pace in August, but fell off in September and October, Chief Financial Officer Brian Gladden said during a conference call.

'We expect the challenging environment to continue,' Mr Gladden said.

The CFO also said Dell decided not to follow some competitors who slashed prices deeply in areas of the US and elsewhere. The choice hurt the top line, but helped preserve profit.

In one bright spot, Dell's consumer PC revenue increased 10 per cent worldwide as unit shipments jumped 32 per cent. Dell does not break out US consumer sales, but Mr Gladden said that 'the US was a strong part of the good performance.'

However, Dell's consumer sales account for less than a fifth of the company's total, and the solid performance wasn't able to offset trouble in the corporate business. Dell also lacks the product diversity enjoyed by its biggest rival, Hewlett-Packard, which announced this week that it would exceed analysts' forecasts for its most recent quarter.

Shares of Dell jumped 5 per cent to US$10.30 in extended trading, after falling 5 per cent to close at US$9.81 before the earnings report came out.

Retrenching as it tries to deal with the economic uncertainty, Dell has been on a cost-cutting campaign. The Round Rock, Texas-based company eliminated 2,200 jobs in the quarter and has slashed about 9 per cent of its work force in the past year.

As part of an effort to save money, Dell is reviewing its supply chain and manufacturing costs, but did not give an update on Thursday about possible factory closures.

Dell's gross margin improved in the quarter, as lower headcount helped push operating expenses down 11 per cent from the previous year. Lower component costs also helped, as did a modest uptick in sales of software and services, which are more profitable than hardware.

Mr Michael Dell, the chief executive officer, said Dell would continue to aggressively cut costs, and choose stronger profits over grabbing market share from its competitors by lowering prices. -- AP