Dell plans AMD servers; Q1 profit falls

In a surprise move, Dell on Thursday announced it will use Opteron processors from Advanced Micro Devices (AMD) in its high-end, multiprocessor servers by the end of the year.

The news came as Dell announced disappointing earnings for its fiscal first-quarter 2007. Until now, Dell has only used chips from AMD rival Intel in its hardware.

After cutting prices on its PCs in an attempt to regain market share from competitor HP, Dell Thursday reported net income of $762 million for its fiscal first-quarter 2007, falling short of its $934 million profit for that same quarter last year.

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In a surprise move, Dell on Thursday announced it will use Opteron processors from Advanced Micro Devices (AMD) in its high-end, multiprocessor servers by the end of the year.

The news came as Dell announced disappointing earnings for its fiscal first-quarter 2007. Until now, Dell has only used chips from AMD rival Intel in its hardware.

After cutting prices on its PCs in an attempt to regain market share from competitor HP, Dell Thursday reported net income of $762 million for its fiscal first-quarter 2007, falling short of its $934 million profit for that same quarter last year.

Dell posted earnings of 33 cents per share on revenue of $14.2 billion for the quarter ending May 5, down from 37 cents per share on $13.4 billion last year.

The report matched analyst forecasts of 33 cents per share on revenue of $14.21 billion from Thomson Financial. But analysts saw little mystery in the prediction; Dell had warned last week that it would miss its original forecast of 36 cents to 38 cents per share, on revenue of $14.2 billion to $14.6 billion.

Dell said it drew profit from increased sales of servers, storage and foreign markets. Compared to this quarter last year, the company's sales outside the U.S. grew 12%, generating 44% of Dell's overall revenue.

The IDG News Service is a Network World affiliate.