Dell have reported poor second quarter profits and the Wall Street Journal claim that there are tough times ahead for the company as they move away from selling personal computers.
The profit for fiscal period ending August 3rd dropped 18% as revenue also dropped 8%. Dell added that their projection indicates a further revenue decline for the current quarter and have revised their full year earnings forecast.
Dell originally projected a record full year earnings, and they are blaming the poor performance on the state of the economy and a decline in demand for PC’s this year.
Dell’s chief financial officer Brian Gladden said ‘We’re trying to be realistic’ – as the company marked down their projected earnings for the rest of the year.
Their stock price has dropped 18% since May this year, and shares fell 4.5% yesterday to $11.79.
The Wall Street Journal add “Dell’s latest results and projections grated on some analysts, who expressed some impatience it hasn’t made more progress in emphasizing products for businesses rather than consumers. “They haven’t delivered the data points they’ve promised,” said Abhey Lamba, an analyst with Mizuho Securities USA.
Part of the problem is Dell’s PC business, which still accounts for half of the company’s revenue. Growth in the industry is flat and Dell sold fewer PCs in the second calendar quarter of 2012 than the year earlier, according to research firm Gartner.
In the second quarter, Dell said revenue from PCs and related products fell 14% from a year earlier. Consumer sales led the way down, as sales of those machines fell 22%.”
Kitguru says: A tough year ahead for Dell. Would you buy one of their computers?