Sunday 26 October 2014

Profit at Dell slides 47pc after poor sales

Poornima Gupta

Published 17/11/2012 | 05:00

DELL'S third-quarter profit slid 47pc, hurt by lower PC sales, weaker demand from large corporations and the shift to mobile computing.

The company's consumer PC business is struggling with more people using smartphones and tablets to do basic computing, and Dell's corporate customers continue to defer spending in an uncertain economic climate.

The computer maker, which employs thousands in Limerick and Cherrywood in Dublin, warned that it "sees the challenging global macroeconomic environment continuing in the fourth-quarter".

The company, once the world's top PC maker, is struggling to defend its market share against Asian rivals such as Lenovo. It is trying to bolster growth by focusing on products and services to corporations.

The company said it expected revenue to grow as much as 5pc in the current quarter, with the Christmas period usually triggering better sales.

Dell said revenue in its fiscal third-quarter fell 11pc to $13.7bn (€10.8bn), slightly lower than the average analyst estimate of $13.89bn. Dell's enterprise solutions unit saw revenue rise 3pc to $4.8bn, while server and networking revenue climbed 11pc.

In contrast, consumer revenue plummeted 23pc to $2.5bn, underscoring the plight of the broader PC market, and sales to large corporations declined 8pc to $4.2bn in the quarter.

Challenges

Dell's "challenges are frankly the same as before – namely the tough macroeconomic environment and cannibalisation from mobile devices using mobile operating systems from Apple and Google," Shaw Wu, analyst with Sterne Agee, commented.

The consumer market was improving with the launch of the Windows 8 software from Microsoft, which had been designed with touchscreen devices and internet-based computing in mind, chief financial officer Brian Gladden said.

But sales of devices featuring the Windows 8 software have yet to ramp up, while Microsoft is already in the market with its new Surface tablet computer, which may hurt PC sales. (Reuters)

Irish Independent

Read More

Editors Choice

Also in Business