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Dell Q2 revenues down 7.5% on poor desktop sales

by Mark Tyson on 22 August 2012, 13:00

Tags: Dell (NASDAQ:DELL), Hewlett Packard (NYSE:HPQ)

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Dell, the second largest US PC maker announced on Tuesday that Q2 revenues were down by 7.5 per cent and profits were down by a whopping 18 per cent. Furthermore due to the “uncertain economic environment” Dell expects Q3 to continue the pain; projecting a further reduction in revenue of between two and five per cent. Wall Street is still closed for trading but Dell shares are currently valued at $11.78, down by 4.54 per cent in afterhours trading.

Dell’s second quarter revenue was revealed to be US$14.5 billion. The figure disappointed analysts by a small margin, hence the share price drop of a not-too-dramatic 4.5 per cent. Further to the actual realised figures in Q2 Dell’s statement warned of a challenging second half of 2012. Part of the reason Dell has a modest outlook for Q3 is because of the pre Windows 8 sales slump, as people wait for the new OS and associated new computing hardware designed to make best use of it, according to Dell Chief Financial Officer Brian Gladden. However he told investors “The revenue deterioration we saw in the quarter was clearly above anything we expected” according to a Reuters news report.

Dell’s major weakness is in the consumer PC market segment, bringing in its lowest amount of revenue in five years; a figure of $2.6 billion. From that massive amount of revenue Dell only managed to generate profits of $14 million. To try and prosper in the competitive IT market Dell has tried and failed to launch successful products in the growing mobile/tablet market, though Dell is about to try again and will be part of the Windows RT hardware launch party. Also here’s the Dell Windows 8 Pro Intel powered tablet.

A positive aspect for Dell is the company’s server and networking revenue which grew 14 per cent in Q2. Only yesterday the company announced it had hired ex-Hewlett Packard networking chief Marius Haas to help gain traction in the more lucrative enterprise technology solutions market. Also in order to make more profit from its revenue Dell intends to cut more than $2 billion in costs over the next three years, mainly from supply chain and sales departments.

HEXUS Forums :: 6 Comments

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Dell don't seem to offer the amount of customisation they once did and there are smaller companies that provide better service.
I've been really disappointed in DELL recently. I usually recommend them for people like my dad who need a cheap well built PC but don't need to upgrade however the dimension my dad bought 6 months ago was awful. The case was really cheap (Like i'd expect from a £10 ebuyer case) and it vibrates really badly. I use to associate DELL with decent quality cases (Nonstandard but that was fine) - I guess the cost cutting has gone to far….
I really really hope it's their joke of an after sales/customer services starting to hurt them!!!
The first and last time I dealt with them was 6 years ago when I ordered a top of the range gaming rig from them (we have a few Dell servers at work so thought I'd be ok)

The machine turned up badly bashed up and when powered up sounded like it was about to die.

Their diagnostics software revealed the machine was overheating (as well as feeling very warm air from a top vent).

There followed one month of phone calls where I kept being told to run diagnostics despite the fact it told me in the first 5 seconds there was a thermal warning.

They agreed to replace the system after about 5 days of repeated calls and 45 minute holds.

Three systems were rejected by their courier when picked up off the boat from Ireland due to packaging damage but noone phoned to tell me this even though I'd booked time off to wait in for them.

They wanted a four try till I told them I wanted my order cancelling, my money back and that I'd hand it over to the card company if that didn't happen.

They promptly did this but I wouldn't buy a toaster off Michael Dell never mind a PC.

Thankfully there are good system builders in the UK
I like Dell, I think they used to be amongst the best, but they need to raise their game or they're going to be in big trouble.

I got a top of the range laptop back in 2006. It worked a treat, still does (albeit old now), weighs a ton, but you could customise it just how you wanted. NOT ANY MORE though - have you tried using Dell's “customisation” option recently? Pffff.

They made 3 mistakes 1) making flimsy chassis eg their budget laptops that they started to retail via Currys. (they lose the image of quality) 2) they get rid of the ability to customise properly, and thereby tailor to consumers needs/desires. Those bits you can change they then stick ridiculous overheads on upgrades (£60 extra to go from Win7 home to pro OEM is rubbish - as is the £80 (alienware) or £120 (XPS15) upgrade from DVDRW drive to BDR/DVDRW drive. Put it all together and the quality concious consumer loses confidence in them. 3) Not to mention that annoying “can I help you?” autochat pop-up that appears 15 seconds after loading up the Dell website. How many people have left because of that incessant scrolling pop-up I wonder?