Low-priced laptops and other bargain systems cramped Dell Inc.'s second-quarter revenues and the company's CEO said the computer leader had pushed too aggressively for market share.
The rare revenue miss -- nearly US$300 million below Wall Street forecasts -- came atop a 28 percent jump in net income Dell reported on Thursday.
Revenue at the world's largest PC maker rose 15 percent to US$13.43 billion from US$11.71 billion last year.
Quarterly profit climbed to US$1.02 billion, or 41 cents per share, from US$799 million, or US$.31 cents per share, during the year-ago period.
Chief Executive Kevin Rollins said the revenue shortfall resulted from US consumers who stuck with cheap, low-end desktops and laptops instead of upgrading to pricer, more profitable models.
"We can sell systems at US$299 and US$399, but we don't want to," he said. "We just misexecuted and didn't get the upsell in the consumer business that we normally get. That just got away from us. We stumbled there but we'll get that back in line."
Still, Round Rock, Texas-based Dell reported an industry-record shipments of 9.1 million computer systems -- including 2.7 million mobility products -- and company-record revenue of more than US$2 billion from software and peripheral products, including printers and displays for the quarter ending July 29.
The strongest gains were in sales of laptops, which increased 20 percent year-over-year, while revenue from outsourced computer system management grew 41 percent from the year-ago quarter.
Tim Bajarin, analyst at Creative Strategies, said Dell's numbers were good considering the squeeze facing the overall industry.
"Just knowing how well they compete, I have to believe that things bode pretty well for them and even the industry in general," he said. "At the same time, they're going to have to be much more aggressive in their marketing to try to get people to go into the mid- and upper-range systems."
Later this year, Dell is expected to launch a new line of high-priced premium PCs, but the company has declined to discuss any details of that strategy.
Rollins said that there was a "tight" supply of components such as memory chips and flat panel displays which he predicted would last through the third quarter. But, he did not anticipate any price increases.
Globally, Dell posted a quarterly growth rate of 18 percent. Most of that was in European and Asian markets, which grew at 21 percent and 24 percent, respectively. The US, meanwhile, saw a less robust 11 percent.
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