Lenovo cut 450 jobs in China. A month ago, it announced larger layoffs. As demand for PCs cascades it appears hard for the Asian company to keep up by increasing cost cuts.
The news about Lenovo may be particularly bad for Dell (NASDAQ: DELL). According to the AP, "Lenovo says it has been hit harder than competitors by the global slowdown because of its reliance on corporate customers, who have cut spending more sharply than consumers." Dell's base of buyers is also tilted toward corporations, which increases the chances that it may miss earnings in the next quarter and give guidance below what Wall Street expects.
At $8.26, Dell's shares already trade near a 52-week low and have lost two-thirds of their value over the last year. Analysts expect the U.S. PC maker to have EPS of 21 cents in the current quarter down from 31 cents last year. That number will not only be pressured by dropping PC sales. Dell's other large business is servers. New data from research firm IDC shows that worldwide server sales contracted 13% in the last quarter. IDC data shows that Dell's revenue slipped almost 10% for the same period.
Dell is going to have a bad quarter, and it will probably be worse than Wall Street expects.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
2-25-2009 @ 1:20PM
jason said...
Hey all need to cut costs and bring down the cost of a 15 inch laptop for say $299 and they will fly through the internet.Peeps are saving gents, too much worry, everywhere yeah start selling a good quality wireless laptop for around $299 and good 2 gig desk for $349 you won't be able to keep up with the demand, you may as well it's coming anyway better to initiate that that fall. Have a goodie, tk Moonie