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Dell, Inc.'s (NASDAQ: DELL) latest latest quarterly results released after the bell Thursday pretty much sucked. The second-largest computer manufacturer in the world saw net income drop by almost 50% as shipments dropped globally and Dell continued to see huge challenges in the IT spending market. Dell did not even match its already-lowered expectations. It reported an EPS figure of 18 cents, quite below the expected 26 cents a share.Net income also fell to $351 million from the year-ago quarterly figure of $679 million. Dell's CFO Brian Gladden indicated in the conference call to investors that a dramatic slowdown was seen in India and China, further exacerbating consumer and business spending reductions on its products in the U.S. Although the news was worse than expected for Dell's latest quarter, Gladden kept the call upbeat by constantly mentioning Dell's in-progress cost cuts, with even more to come.
In March of last year, Dell outlined several cost-cutting moves meant to save the company $3 billion into 2011. Dell boosted that target to $4 billion in the call, indicating more moves into contract manufacturing for its products on top of the existing 25% of manufacturing outsourcing it already does. With revenue having decreased 16% to $13.43 billion in its latest quarter, Dell's turnaround efforts that began when founder Michael Dell returned in 2007 seem to be faltering a bit. Although not many PC manufacturers are seeing huge growth patterns, Dell still has not upped its game in the global market solidly, even with its entrance into the consumer retail space. There is still much work to be done.
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Reader Comments (Page 1 of 1)
2-27-2009 @ 10:22AM
Mike O said...
In the low margin PC business it will be survival of the fittest.
HP was smart in that they diversified, moving into consulting and other areas. They will weather the storm in the same way IBM has over the last several decades.
Dell has no such diversification and will see margins further stretched as this recession continues to play out. In the next couple years we will see what Dell is really made of.