Dell Falls Short on Revenue Line

Dell(DELL Quote) missed Wall Street's revenue estimates for its fiscal third quarter Thursday, as the strain of the information-technology spending slowdown ate into its top line.

In the three months ended Oct. 31, Dell had sales of $15.16 billion, down 3% year-over-year, and well below analysts' estimate of $16.22 billion.

The Round Rock, Texas, computer maker did have a better-than-expected profit, posting net income of $727 million, or 37 cents a share, compared with earnings of $766 million, or 34 cents a share, in the same period last year. Analysts had estimated earnings of 31 cents a share.

Dell's third-quarter operating income was just over $1 billion, up from $829 million in the prior year's quarter.

"We increased profitability with an improved mix of products and services," said Dell Chief Executive Michael Dell, in a statement. The company has also benefited from tight cost controls, he added.

After slipping 5% in the regular session, shares of Dell were up 43 cents, or 4.4%, to $10.24, in extended trading.

Dell's revenue performance contrasts starkly with that of arch-rival Hewlett-Packard(HPQ Quote), which expects fiscal fourth-quarter results above expectations.

H-P said Tuesday its global reach, diverse customer base and cost-cutting measures are helping it weather the economic downturn.

Dell's results also suggest that Michael Dell has more work to do streamlining his business. The firm has already embarked on extensive cost-cutting measures, even after completing a previous restructuring plan that eliminated 10% of its head count.

Dell, however, is not the only tech company being forced to overhaul its business in a tough economic climate. Sun(JAVA Quote), for example, recently announced plans to cut 18% of its global workforce.