Net profit in Dell's fiscal fourth quarter ended January 30 fell 48 percent

SAN FRANCISCO (Reuters) - Dell Inc (NasdaqGS:DELL - News) reported a sharper-than-expected fall in quarterly revenue as consumers bought cheaper personal computers, but cost cuts helped profit meet Wall Street forecasts.

Shares of Dell rose 3.5 percent in a relief rally as investors had feared the results would be worse, after bigger rival Hewlett-Packard Co (NYSE:HPQ - News) last week posted disappointing quarterly revenues and cut its full-year outlook.

"I think the market was beginning to price in Doomsday results," Edward Jones analyst Bill Kreher said after Dell's results on Thursday. "Dell continues to go for profits over growth, and costs are one level that the company can control and they are successfully executing on that."

Net profit in Dell's fiscal fourth quarter ended January 30 fell 48 percent to $351 million, or 18 cents a share, from $679 million, or 31 cents a share, in the year-ago period.

Excluding special items, profit was 29 cents a share, above the 28 cent average estimate by analysts surveyed by Reuters Estimates.

But revenue fell 16 percent to $13.4 billion, missing analysts' average forecast of $14.06 billion.

Chief Executive Michael Dell said in a statement that a lot of technology spending is being deferred until economic visibility improves, so the company has to be "very disciplined" in managing costs.

Dell cut operating expenses by 16 percent in the quarter, and raised its longer term cost-reduction target. Last March, Dell said it would cut costs by $3 billion every year by the end of fiscal 2011. It said on Thursday that it now saw opportunities to raise that cost savings target to $4 billion.

"We'll be the first to admit that this is a work in process and that there's more to do," Chief Financial Officer Brian Gladden said on a conference call with analysts.

He told reporters on a separate call that Dell has reduced its cost of goods sold and operating expenses. "In every bucket of costs we continue to see more opportunities," he said.

When asked if Dell was comfortable with its current headcount, Gladden said "we continue to look at cost broadly across the business and we continue to see more opportunities there to streamline and improve our competitiveness."

Dell, the world's second-largest maker of personal computers, did not give financial forecasts. Analysts have said that the company would be more vulnerable to the slump in PC and computer hardware demand, compared to HP or International Business Machines Corp (NYSE:IBM - News).

Last week, HP cut its full-year earnings and revenue estimates on weak sales of printers, PCs and servers. But earlier on Thursday, IBM affirmed its 2009 outlook, supported by its software and services business.

Dell said its global consumer division saw shipments rise 18 percent, boosting its global market share to nearly 9 percent, but as more consumers bought lower-priced notebooks and desktop PCs, revenue fell 7 percent to $3 billion.

Dell's Americas commercial business saw revenue fall 17 percent to $6 billion, with units falling 23 percent.

Gladden said Dell could not predict how long or how deep the slowdown will be, but is planning for it to be protracted.

Shares of Round Rock, Texas-based Dell fell to $7.90 in extended trading before recovering to rise to $8.50 from their Nasdaq close of $8.21. The stock has fallen around 65 percent over the past six months.