Dell Posts Staggering 72% Decline in Quarterly Earnings
August 16, 2013 10:02 AM
The takeover battle continues
Dell Inc. has been embroiled in a
between Michael Dell, founder and current CEO of the company, and major investor Carl Icahn. So far, neither group has been able to propose a takeover offer acceptable to the company board and shareholders. While the takeover battle rages, the computer industry continues its decline leading to an abysmal quarter for Dell Inc. when it comes to PC sales.
Dell is currently the world's third largest computer maker, but it reported a 72% decline in quarterly earnings as
PC sales continue to sag
. The poor quarterly earnings could help improve Michael Dell's chance of securing his takeover with an offer of $13.75 per share plus a $.13 dividend. Many Dell shareholders believe that the stock was worth more than that offered about.
"It was predictably bad. It's not a big surprise that margins compressed to the degree that they did, when they're prioritizing sales volume over profitability," Morningstar analyst Carr Lanphier said. "You have to offset that uncertainty somehow."
Dell shares dropped two cents to $13.68 in after-hours trading after the earnings were announced. That's a few cents less than Michael Dell's purchase offer. Net income Dell fell to $204 million compared to $732 million in the same quarter the previous year. Gross margins for the quarter declined 1% compared to the previous quarter to 19.6%.
Enterprise solutions, services, and software were bright spot for Dell, gaining 9% with $5.8 million of earned during the quarter.
"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs
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