Dell profit slides 47 percent amid weak PC market

Sales of desktop PCs and laptops both declined in the quarter

Dell today reported a sharp drop in revenue and profits for the third quarter as the weak PC market continued to weigh on its results. Dell's revenue for the quarter, ended Nov. 2, was $13.7 billion, down 11 percent from a year earlier and shy of the $13.9 billion financial analysts had been expecting, according to a poll by Thomson Reuters.

The Texas firm still gets roughly half its revenue from PCs, so declines in that market significantly hurt the company. Worldwide PC shipments declined 8 percent in the third quarter, as a result of a weak economy and a move toward smartphones and tablets for more computing tasks, Gartner said last month.

[ Dell, HP, IBM blade servers battle for the virtual data center; find out which comes out on top in InfoWorld Test Center's review. | Keep up on the day's tech news headlines with InfoWorld's Today's Headlines: Wrap Up newsletter. ]

The slowdown has also hit Intel, which last month also reported a drop in revenue and profit for its third quarter.

Dell is trying to boost its profits by selling more high-end PCs such as Ultrabooks, rather than cheaper models. But a recent report from IHS iSuppli said consumers are favoring low-end systems, and that high-performance PCs will account for only 6 percent of the market this year.

Dell's revenue from desktop PCs declined 8 percent in the period just ended, to $3.1 billion, while sales of "mobility products" -- including laptops -- fell 26 percent to $3.5 billion, the company said. Sales of storage equipment, services, and software also declined.

A bright spot was Dell's server and networking business, where combined sales were up 11 percent, CFO Brian Gladden said. "We're also encouraged by early interest in our new Windows 8 touch portfolio and the opportunities it creates for our commercial and consumer businesses," he said.

Net income was $475 million, or $0.27 per share, down from $893 million, or $0.49 per share, a year earlier, Dell said.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

From CIO: 8 Free Online Courses to Grow Your Tech Skills
Join the discussion
Be the first to comment on this article. Our Commenting Policies