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Last Updated: Thursday, 28 February 2008, 22:31 GMT
Dell's profits fail expectations
A Dell computer
Until last year, Dell sold only direct to customers
Dell, the world's second largest computer maker, has announced lower than expected profits.

Boss Michael Dell said "we have much work to do", as he announced net income in the three months to February down 6% to $679m (340m).

Last year it sold computers through retail outlets for the first time, but this has failed to boost profits.

Analysts fear future sales will be affected by the slowing US economy, where Dell does half of its business.

"Dell's less international exposure versus major competitors holds them back," analyst William Kreher from Edward Jones said.

Dell says revenue growth was led by countries outside the US, where sales were up 16%.

It was particularly strong in Brazil, Russia, India and China where revenue rose 36%.

Cutting costs

The company has tried to reduce costs and boost productivity. It has cut 3,200 jobs in the last eight months and has been bringing out new products more often.

"While Dell continues to drive towards world-class cost structure and competitiveness we have much work to do," chief executive and chairman Michael Dell said.

The company plans to cut 8,800 posts in total. It has warned the cost of the job reduction plan will affect Dell's figures in the coming months.

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