Dell has reported a whopping 54 per cent drop in profit for its most recent quarter, and a 15 per cent revenue decline.

The company said that the biggest drop in demand was from large corporate buyers, which make up a big proportion of its customer base. Small and medium sized company sales revenues rose five per cent on the quarter, but were down 19 per cent on the year.

Sales to government were less badly affected, thanks to the US stimulus package. Revenues were down seven per cent on the year and three per cent on the quarter in this sector.

"We are seeing improvement in overall underlying IT demand that is continuing into the fourth quarter," said chief executive Michael Dell.

"The same is true with momentum in Dell's business, specifically in our Large Enterprise and SMB segments. The launch of Windows 7 is being very well received by small businesses and consumers, and we will see the benefits of that more fully in our fiscal fourth quarter."

The company is expecting a strong fourth quarter in the consumer market. Sales were flat for the third quarter and 10 per cent down on the same period last year, but Windows 7 and the Thanksgiving and Christmas period is traditionally a strong time for computer sales.

Wall Street reacted badly to the results, and Dell shares had slipped seven per cent at the close of trading.