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back to article Dell profits sink 17% as revenues rise

Dell posted a surprise 17 per cent drop in profits for its fiscal second quarter, even though its revenues handily beat Wall Street estimates. Round Rock said the earnings squeeze was a result of technology spending slowdowns and its expansion into Europe and Asia. Net income was $616m in the quarter, down 17 per cent from a …

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  1. Anonymous Coward
    Alien

    This is not as bad as it might seem because ...

    Dell have declared "reduced profits"... at a time when most of the business sector are recording "actual losses". Think of it in cannibal terms... it's similar to giving up on half your breakfast ... instead of cutting off your own arm in order to feed someone else.

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  2. sleepy

    Oh yes it is bad . . .

    Are HP, Acer, Lenovo, Apple recording "actual losses"? No.

    Dell runs on a turnover treadmill; they grow revenue (sales) and spend the resulting supplier credit to buy back their own stock.

    Dell products have no advantage, so Dell has no pricing power. To keep the treadmill running, they have to cut prices. Sales up 11%, units up 19%, ASP down, margins down. But it's worse than that, to keep sales up they've stuffed a new worldwide retail channel with product at even lower margins. (visited Tesco recently?)

    Dell has cut overheads and head count by selling off assets and outsourcing support, product design and sales. Effectively they're ripping up the floorboards and burning them to keep warm.

    Don't be the last one to realise Dell are milking the final revenues from their old brand values. As we move to the post-PC era in both enterprise and consumer markets, things look bleak for Dell. It's probably too late to follow IBM's footsteps out of the PC market, but that looks to be what Michael Dell had hoped for.

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  3. Anonymous Coward
    Thumb Up

    true - very true, all true ... but

    everyone is doing that, crikey, Gordon Brown's been doing it on a national scale for a decade ... and no, although I was responsible some time back for 70+ Dells on a wittle bitty network I have never been tempted to buy one for myself, it's much more fun to buy funky bits of kit from the likes of OC's and build something that won't be out of date for 6 months rather that to purchase anything "prebuilt" that was out of date before the advert went to press.

    (Just wanted to confirm I wasn't the last to suss the market mate)

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