Dell hunkers down after 48% fall in fiscal fourth-quarter profit

— -- Showing its heavy reliance on discretionary tech spending, the No. 2 PC maker on Thursday reported a 48% drop in profit during its fiscal fourth quarter.

CFO Brian Gladden said in a conference call he could not predict when demand would rebound. He also announced an increase in cost-cutting measures to $4 billion, up from $3 billion, based on "protracted" soft demand.

And Dell is prepared to cut costs even deeper if it has to. The company has drawn up cost-cutting options pegged to "multiple scenarios around where the demand might be," Gladden says

Investors appeared to accept Dell's hunkering-down approach. Its share price rebounded to $8.32 in after-hours trading. It had slipped 15 cents, to $8.21 a share, at market close.

"We have to see how they do as the economy continues to unravel," says Martin Reynolds, tech industry analyst at Gartner. "But I think they've demonstrated that they're on solid footing in these uncertain times."

The company posted net income of $351 million, or 18 cents a share, in its fiscal fourth quarter ended Jan. 30. That compares with net income of $679 million, or 31 cents a share, in the same quarter a year ago.

Across its entire fiscal year, Dell posted earnings of $1.25 a share on sales of $61.1 billion. That was down from earnings of $1.31 a share and revenue of $61.13 billion in the prior year.

Richard Shim, analyst at IDC, says Dell will need to do much more than just cut costs. The company remains too U.S.-centric and too reliant on desktop PC and laptop sales, both mature markets caught in a wicked downturn.

"You can cut as much as you want, but if you're not growing, it doesn't matter," Shim says. "Flat is the new up. They've just got to get to flat, and that's going to be hard. They've got a number of forces going against them."