Dell Still Struggling with the Shift in Computer Market

The quarterly profit of Dell plunged by half and was weighed down. The company is facing weak demand with respect to personal computers and it tried to expand into the lucrative business.

Dell has started pushing the new services and products from the corporate customers as the sales of PCs have eroded. Net income of the company fell by 47 percentage for the 3rd fiscal year that ended on November 2nd. The total revenues declined by 11 percent and there is a projected decline with respect to the profits for the present quarter too.

Poor PC Sales Are a Growing Concern

Brian Gladden, the chief financial officer of Dell said that there is a lot of difference in the market for past one year. Revenues from PCs have declined by 19 percent over past one year. The major drop in the business was in consumer sales that fell by 23 percent to about USD 2.5 billion.

PCs are in declining state in every brand as customers are turning towards smart phones and tablets. In the 3rd quarter, shipments of PCs across the world plunged by more than eight percent when compared with the previous year’s numbers.

In the current quarter, Microsoft launched the new Windows version, which boosted the PC sales. In order to offset the declining business of PCs, Dell is on the acquisition binge with different software, networking tools, and storage capacity.

Insight into Split-Up of the Numbers

With few exceptions, the networking and server business grew by almost 11 percent in the current quarter. Revenues of Dell products have started declining over past 12 months, as storage products dropped by 16 percent, accessories and software fell by 11 percent, and all other services were down by 1 percent.

Mr. Gladden said that Dell’s strategy is profits over the improving gaining market share. Shares of the company fell to USD 9.56 at 4 PM trading and declined about 1.5 percent in after-hours trading to USD 9.42.

For the fiscal 3rd quarter, net income of Dell was USD 475 million, or 27 cents per share, when compared with the previous year’s USD 893 million, or 49 cents per share. Excluding the one-time charges, earnings has decreased to 39 cents per share to from 54 cents a share.

Revenues for the quarter were down to $13.7 billion compared with $15.4 billion a year ago. For the present quarter, Dell expects the overall sales to increase by 5% in sequence. The company is on its track to earn USD 1.70 a share.

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