Dell gained $250 million during the quarter from what it obliquely referred to as "vendor settlements." A spokesman declined to elaborate on the nature of those settlements. Several big computer-display manufacturers have been fined recently for price fixing, and it's possible Dell benefited from payments related to those cases.
Dell used some of the settlement money to essentially subsidize PC prices for some of its bigger customers, with the hope that those "investments," as Gladden called them, would help it retain those customers and lead to sales of more profitable gear in the future.
There is intense price pressure in the PC market, and Dell has said it will try to resist selling very low-cost PCs in order to keep its profitability up. That hurt it in the consumer market, where the growth is currently in "value" PCs and in tablets - another market where Dell is not strong. As a result, revenue in its consumer PC business was down 24 percent.
Dell is still holding out for a big corporate PC refresh cycle in which businesses will complete their upgrades to Windows 7. Dell estimates that some 40 percent of corporate PCs are still running Windows XP or Windows Vista, Gladden said.