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Dell's Profit, Stock Drop On Weak Quarterly Report

In the last quarter, Acer replaced Dell as the world's No. 2 personal computer maker. Dell has said it is willing to lose some market share rather than lower prices too much. That is a key part of Dell's strategy to improve profitability ¿ an effort that has included a huge restructuring.

Dell's work force was trimmed by 9,300 last year to 78,900 at the end of January, the last time the company gave employment figures. It also has changed the way it makes and sells computers, leaning more on contract manufacturers and retailers instead of doing everything in house.

Dell is also trying to expand into more profitable markets through acquisitions. The most significant is Perot Systems Corp., a technology-services company that Dell is buying for $3.9 billion. The deal is a move against HP, which paid $13.9 billion for another services company, Electronic Data Systems Corp.

The changes haven't been enough to lift Dell's profit. Net income fell to $337 million, or 17 cents per share, in its latest quarter, which ended Oct. 30. That compares with $727 million, or 37 cents a share, in the same period a year ago.

Revenue fell 15 percent to $12.9 billion.

Analysts polled by Thomson Reuters expected Dell to earn 28 cents per share on $13.2 billion in revenue in the latest quarter.

Dell, which is based in Round Rock, Texas, said it expects revenue in the current period to be better than in the prior quarter, but it attributes that to the seasonal benefit of consumers buying PCs around the holidays.

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