Dell Quarterly Profits Drop 47%

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On Thursday, Dell announced that its quarterly earnings fell 47 percent and revenue declined 11 percent, thanks in large part to declining PC sales. The company’s stock took a tumble as a result.

The Wall Street Journal’s Ben Worthen and Ian Sherr reported, “Dell Inc.’s quarterly profit plunged by nearly half, weighed down by weak demand for personal computers even as the company tries to expand into more lucrative businesses. Dell, which has been pushing new products and services for its corporate customers as PC sales have eroded, said Thursday that its net income fell 47% for its fiscal third quarter ended Nov. 2, while revenue declined 11%. Dell projected another decline in revenue and profits for the current quarter, a reversal from its stance at the beginning of the year when it projected record earnings per share.”

Aaron Ricadela from Bloomberg BusinessWeek added, “Dell Inc. (DELL) fell to the lowest intraday price in more than three years after forecasting a fourth straight quarter of declining sales, a sign that a slump in demand for personal computers will persist. The stock dropped to as low as $8.81, the lowest since March 12, 2009, and had fallen 7.8 percent to $8.83 as of 10:59 a.m. in New York. Fiscal fourth-quarter revenue will be $14 billion to $14.4 billion, the Round Rock, Texas-based company indicated in a statement yesterday. That’s less than the $14.5 billion average estimate of analysts, according to data compiled by Bloomberg. Revenue was $16 billion a year earlier.

Computerworld’s James Niccolai noted, “The Texas company still gets roughly half its revenue from PCs, so declines in that market hurt the company. Worldwide PC shipments declined 8% in the third quarter, as a result of a weak economy and a move toward smartphones and tablets for more computing tasks, Gartner said last month.”

On Friday, Dell countered Thursday’s bad news with news of an acquisition. According to ZDNet’s Jack Clark, “Dell has purchased Gale Technologies, a specialist in datacentre management and cloud creation, in a move that bolsters the hardware giant’s ambitions to become an enterprise services provider. The acquisition was announced by Dell on Friday. Alongside this, the company said it is forming an Enterprise Systems and Solutions group, which will help with its strategy.”