Dell Inc said on Thursday that its net income dropped 54 percent in the latest quarter amid signs the company isn’t fully benefiting from the computer industry’s fledgling recovery.
Dell’s numbers missed Wall Street’s forecasts, and the shares fell almost 6 percent in extended trading.
In the last quarter, Dell lost its ranking as the world’s No. 2 personal computer maker, a slot now held by Taiwan’s Acer Inc (宏碁).
Dell rivals such as Acer and Hewlett-Packard Co (HP) have stolen market share in part by exploiting their bigger presence in retail stores.
That has been a big weapon because consumer interest in little laptops called “netbooks” has helped the PC industry start to pull out of its worst slump in years.
HESITANT
Instead, Dell gets 80 percent of its business from corporations, government agencies and other large institutions, which have remained hesitant to spend money on new technology.
Dell said on Thursday that it is seeing improvement in some areas, but repeated its earlier prediction that a meaningful rebound in technology spending by businesses won’t come until next year.
The company has said it is willing to lose some market share rather than lower prices too much. That is a key part of Dell’s strategy to improve its profitability — an effort that has included a huge restructuring.
Dell’s work force fell by 9,300 last year to 78,900 at the end of January, the last time Dell gave employment figures.
The company also has changed the way it makes and sells computers, leaning more on contract manufacturers and retailers instead of doing everything in house.
Dell is also trying to expand into more profitable markets through acquisitions. The most significant is Perot Systems Corp., a technology services company that Dell is buying for US$3.9 billion.
The deal is a move against HP, which paid US$13.9 billion for another services company, Electronic Data Systems Corp.
PROFIT
The changes have not been enough to lift Dell’s profit. Net income fell to US$337 million, or US$0.17 per share, in its latest quarter, which ended on Oct. 30. That compares with US$727 million, or US$0.37 a share, in the same period a year ago.
Revenue fell 15 percent to US$12.9 billion.
Analysts polled by Thomson Reuters expected Dell to earn US$0.28 per share on US$13.2 billion in revenue in the latest quarter.
Dell, which is based in Round Rock, Texas, said it expects revenue in the current period to be better than in the prior quarter, but it attributes that to the seasonal benefit of consumers buying PCs around the holidays.
Dell’s restructuring hasn’t won over investors. The stock has fallen more than 30 percent over the last two years. Its shares fell US$0.92 to US$14.95 in extended trading after the earnings report.
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