Savings Experiment: Snow Removal
Why Your 2012 Tax Bill May Jump By $8,000Michael Dell may wish that he had not thrown out former CEO Kevin Rollin in January 2007. Fixing Dell (NASDAQ: DELL) may have seemed a reasonable goal from his standpoint. He not only had founded the place, but had built it into a fairly big operation. Rollins had all the signs of a good manager and he presided over two years of rapid growth. When that ended and Wall St. turned on the company, Dell returned in great glory.
The just-reported quarter shows how hard Dell will have to work to fix his company. The firm had earnings of $679 million last quarter on $16 billion in revenue. Both numbers missed Wall St. estimates. To make matters worse the company said in a statement that its results "could be adversely impacted by more conservative spending by its customers," according to MarketWatch. The stock dropped 4% after hours.
Server and desktop revenue barely moved in the quarter compared with the same period a year ago. On the server side that means that Hewlett-Packard (NYSE: HPQ) and IBM (NYSE: IBM) are probably taking share. HP and Asian PC companies like Lenovo and Acer are most likely to blame for Dell's light PC sales.
Clearly, Dell's plan to move into retail outlets is not bearing much fruit. Electronics outlets are selling a large number of brands. Some, like Apple (NASDAQ: AAPL) are flying off the shelves.
Micheal Dell did not have to contend with Apple when his company was in its early stages. There were some good PC companies like Compaq. IBM's PC business was doing poorly and was eventually sold.
Dell now operates in a much more crowded industry, and it shows.
Douglas A. McIntyre is an editor at 247wallst.com.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
3-03-2008 @ 2:09PM
hifiaudio2 said...
What is really going to hurt Dell is that a culture that once rewarded all out sales performance has turned to one that is much closer to paying cut rate salaries to even top salesmakers and has fostered a very low morale. Only recently has a major overhaul of the compensation plan taken place, and it is only bad news. People are looking to leave the company in droves and this will not cease until the commission structure of old returns. Dell once had an army of zealots looking to spend every waking hour making sales. Now the numbers are unnatainable and the salaries low, so people simply wait to go home.