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Dell reveals the numbers from a successful second quarter

Dell posted a profit and company sales beat modest Wall Street analyst expectations, recording a $733 million profit for the company's 2008 fiscal second quarter.

The cause of the surge for the world's number two personal computer maker is due to lower component prices which pushed second quarter income from $502 million all the way up to $733 million.  Dell also received a strong boost from more retailers, Wal-Mart as an example, starting to sell Dell PCs and notebooks.

"While our results demonstrate we've made progress against our goals, we are still in the early stages of transforming our company's structure, costs and operations," said CEO Michael Dell.

Even with the good news, Dell still is losing market share to Acer and Hewlett-Packard, two of the company's biggest competitors in the U.S. market.  Earlier in August, HP raised its own projects for PC sales, stemming from good third-quarter numbers.  

As computer makers understand the world is going mobile with laptops, among other manufacturers Dell also responded in late June by introducing two new laptop lines that come in unique colors.  Both Dell and HP are expected to introduce new notebook and desktop lineups next week.

Also, Dell predicted "component cost declines to slow in the second half, crimping profits."  The news came more than a week after Dell admitted employees tampered with financial statements dating back to 2003. As a result, the company will be forced to restate all financial statements from the four-year period.

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2008?
By ruibing on 9/1/2007 3:03:10 AM , Rating: 2
quote:
recording a $733 million profit for the company's 2008 fiscal second quarter


How is that possible when we are still in 2007?




RE: 2008?
By TomZ on 9/1/2007 7:48:38 AM , Rating: 4
Because a fiscal year used by a company is not always the same as a calendar year used by you and I.

http://en.wikipedia.org/wiki/Fiscal_year


RE: 2008?
By Spivonious on 9/2/2007 9:55:40 AM , Rating: 2
Yeah but that would mean that their second fiscal quarter is already over. Since this report was released August 31st, their fiscal year 2008 seems a lot like the calendar year 2007.


RE: 2008?
By TomZ on 9/2/2007 10:32:30 AM , Rating: 2
Dell's 2QFY08 is for the three months ending August 3, 2007:

http://www.dell.com/downloads/global/corporate/sec...

It's kind of a crazy definition of a fiscal year, but there must be some benefits to Dell to doing it this way.


crimping profits ?
By crystal clear on 9/1/2007 1:58:06 AM , Rating: 2
quote:
Also, Dell predicted "component cost declines to slow in the second half, crimping profits."


Those components cost declines are for them to pass on to the buyers & not for boosting their profits/revenues/etc.

But there is no decline in Intel finance for their marketing.

Lower prices for their products means higher sales !




RE: crimping profits ?
By rdeegvainl on 9/1/2007 8:57:57 AM , Rating: 2
That lower costs means higher sales is generally true, but then you have to be able to figure the total market, only so many people are going to buy computers, and then you have to analyze the profit you make now and compare to potential profit of lowering prices. If by lowering the price, you don't increase sales enough to keep profits at a steady level, then why should they bother. They aren't suddenly charging you more than they were before, you just aren't seeing the lowest possible price, and if computer sales are still thriving, I don't care. It isn't like DELL has a monopoly on computer sales. They will correct themselves, like I said before, let them have their money. If in the meantime you want to get the lowest price, buy elsewhere.


RE: crimping profits ?
By crystal clear on 9/1/2007 11:30:47 AM , Rating: 3
You certainly put forward some constructive/positive arguments -just been reading something,would like to share it with you.

Dell's profit was reduced by $102 million, or 3 cents per share, due to payments to its former CEO and 400 employees for stock options that could not be exercised during its audit, which found that executives adjusted accounts to meet financial targets. Dell also recorded $59 million, or 2 cents per share, for costs related to the audit in the second quarter.



http://www.reuters.com/article/ousiv/idUSWEN074020...

I am not focusing on Dell exclusively rather OEMs in general,but note where their profits end up ultimately.

Anyway always a pleasure discussing with you & TOM.


RE: crimping profits ?
By TomZ on 9/1/2007 12:20:13 PM , Rating: 2
Likewise!


Great Sales... For Now.
By Inkjammer on 9/1/2007 3:11:19 AM , Rating: 2
Dell exceeded sales expectations and set high numbers, but how many of those Dell orders still haven't left the build phase? Every report on Dell lately indicates just about everybody is waiting on their Midnight Blue or Funktastic Tweed lid that has been waiting to be painted for about a month... or two. There are some petty huge threads of people on www.notebookreview.com who have been waiting and waiting, yet have nothing to show for it.

Dell may have huge record numbers, but is counting "shipped" or "ordered"? Record sells today, but cancellations do not make for happy fun profit.




RE: Great Sales... For Now.
By TomZ on 9/1/2007 11:45:14 AM , Rating: 2
Good point, but if a company is supply-constrained, then a customer cancelling an order probably won't impact their financials, at least in the short term. This is because they will just sell the cancelled product to another customer who is waiting.

Obviously if this happens on a large scale, or it overall impacts customers' impressions of the company, then there would be a longer-term impact.

To answer your question more direct, I'm not an accountant, but based on my knowledge, they wouldn't be able to record a sale until the product is shipped to the customer.


RE: Great Sales... For Now.
By crystal clear on 9/1/2007 12:27:59 PM , Rating: 1
Hi Tom- this is for you- not related to the topic in discussion.


Jerusalem (Israel) - A company called Mempile has developed a prototype storage device which uses a DVD-like disc capable of eventually storing up to 1 Terabyte worth of data in a semi-transparent disc. It has 200 physical layers of about 5GB each on this disc. That's enough to store more than 250,000 MP3s, 115 full-length DVD movies, or 40 full-length HD movies on each disc. Researchers believe the technology will yield multi-TB discs that could fit in your coat pocket.

The process involved in storing data using this media is quite different from traditional CDs or DVDs which uses physically etched pits to represent 1s and 0s. The multi-terabyte process relies on a photochemical reaction which takes place at the focal point of laser. The unique material in use is what allows it to happen.


http://www.tgdaily.com/content/view/33582/135/


Tastes like chicken
By EglsFly on 9/1/2007 1:56:27 AM , Rating: 2
Who knows, Dell could be cooking the books again for all we know....




Screw Dell
By sephiroth4 on 9/2/2007 9:37:47 PM , Rating: 1
Dell gets their money from school districts, among other tactics. Education (k12) cannot get the same 399 are you outta your mind specials as on the small business/home sides. Some bull, so the cheapest deals we can get...well let's just say those Walmart specials are lookin' mighty fine...ughghgh




The reason why notebooks are so successful...
By daftrok on 9/1/07, Rating: -1
RE: The reason why notebooks are so successful...
By Acanthus on 9/1/2007 1:04:49 PM , Rating: 1
-Batteries that typically fail within in a year and must be replaced for $169 and are not covered by the warranty.


By Aprime on 9/1/2007 4:59:58 PM , Rating: 2
They do? Well, I'll be damned!


By Spivonious on 9/2/2007 9:57:31 AM , Rating: 2
Huh?? My dad has had a laptop that he charges every night for the last five years with zero problems. Maybe you just buy junk.


By TomZ on 9/2/2007 1:23:21 PM , Rating: 2
You're exaggerating in the other direction, essentially doing the same thing as the original poster.

The truth is that batteries that use current technology last 2-3 years typically. Batteries that fail before 1 year are rare, and batteries that are still usable at 5 years are possibly usable but will have far less capacity than they originally did.


Do we really benefit from price cuts !
By crystal clear on 9/1/07, Rating: -1
RE: Do we really benefit from price cuts !
By Soccerman06 on 9/1/2007 2:19:24 AM , Rating: 2
Why should a company who stands to make more money off a particular model lower the price when the average consumer knows nothing about the recent price cuts? They could possibly save 50% (give or take) of the cost on the Core2Duo and minor drops from chipset and other pieces. Why should they make less profit when they potentially can make more money at the same price.

Now arguing price/quantity issues will probably arise sometime later in this post... but there are a few things to think about.

If they lower the cost of the unit, more people could potentially buy it, but theres usually a set number of people who buy computers every quarter. Majority of them in the summer and fall are college students who probably use their parents money or a loan for a computer. The number of computers a given company will sell during these 2 quarters generally stay even year after year no matter what the new tech is out or how cheap it is (within reason...). Now in the first and second quarter there are people less people who need computers and so the price will drop here to spur on the few sales they can get from the average joe.

OEM/Retail make money no matter what they do, they sell it at a set price (discounted to a large sale) and I doubt OEM cares bout how the company they sell the product, as long as the product gets sold.

Eh, its all about making more money, the one thing everyone thinks they need.


RE: Do we really benefit from price cuts !
By crystal clear on 9/1/2007 2:51:29 AM , Rating: 2
quote:
Why should a company who stands to make more money off a particular model lower the price when the average consumer knows nothing about the recent price cuts?


Its the resposibility of companies like Intel/AMD & the rest to ensure the average consumer/buyers knows about these price cuts via advertisements in newspapers/TV in addition to the regular forum channels.
They have to convey the message "These price cuts are for YOU the BUYER" -Ensure that you recieve them !

quote:
Why should they make less profit when they potentially can make more money at the same price.


As I said early-
"Its high time OEMs lower their prices for their products even more & stop being greedy . "

"Its high time component manufacturers like Intel/AMD & OTHERS insist/ensure that their price cuts are passed on to the buyers in even more lower prices for desktops/laptops etc."


quote:
Eh, its all about making more money, the one thing everyone thinks they need.


YES in all fairness but with a little bit of honesty.


RE: Do we really benefit from price cuts !
By TomZ on 9/1/2007 7:46:57 AM , Rating: 2
Hi Crystal Clear - Greetings from sunny Michigan!

As you probably know, prices for something are mostly set by the perceived value of the product, not based on the cost to produce the product. Therefore, Dell is right to not lower prices, except due to competitive demand to do so.

I recently purchased a few Dell products, and IMO the prices were pretty good. I'm glad Dell (and others) can make a profit while at the same time offering good prices. It's in all of our best interests if more of these companies are successful in that way.


RE: Do we really benefit from price cuts !
By crystal clear on 9/1/2007 8:17:52 AM , Rating: 2
Hi TomZ ,

Same to you from equally sunny Tel Aviv(at the moment).

Yes you put up a valid argument but,

-I target all OEMS not only DELL.

-Why do Intel/AMD & others cut their prices ?

-Who do they have in mind-the buyers(we) or the OEMs?

If they have both(we & the OEMs) of them in mind,then let it be a fair distribution ,namely say a ratio of 60:40 of those price cuts for those components.

Its not fair that all those price cuts for components is used to boost their profits/revenues etc.

Yes I agree with you when you say-

It's in all of our best interests if more of these companies are successful in that way.

but "who does not want cheaper prices for as a matter of fact for anything".


By rdeegvainl on 9/1/2007 8:42:58 AM , Rating: 2
I agree that price cuts should be passed on to the buyer. Intel/AMD and others sell most of their products to OEM's. So the OEM's are the buyer.
Intel and AMD cut their prices so more people will buy from them.
It is completely fair for OEM's to charge what the market will hold to(within reason).
The components are still available for individuals to purchase, at the discounted price, if they fail to do so then it is their fault. Rule of thumb is to shop around.
There is no moral responsibility of a corporation to drop prices the moment they find a way to make their products for less. The price cuts will reach consumers in due time. Allow the companies time to enjoy some increased revenue, it is their responsibility after all.


By just4U on 9/1/2007 11:11:45 AM , Rating: 2
You have to wonder just how much money these companies are making per pc mind you. Their profits tend to come in the form of volume sales no?


RE: Do we really benefit from price cuts !
By TomZ on 9/1/2007 12:19:52 PM , Rating: 2
quote:
Why do Intel/AMD & others cut their prices ?

Because they are in fierce competition with one another. Actually, Dell has done a great job in leveling the playing field between them, which helps fuel the competitive pressure. For example, some of the newer Dell laptops are available pretty equally in AMD and Intel configurations, like the Inspiron 1520 (Intel) and 1521 (AMD). These two are almost the same to the customer, except for the processor. Inspiron 1720/1721 are the same.
quote:
Its not fair that all those price cuts for components is used to boost their profits/revenues etc.

Why isn't it fair? I don't follow. The customer will judge the price-to-value ratio for the product and make a purchase decision based on that. The amount of profit they're giving to the company as a part of that transaction can be small or large, but it doesn't really matter to the customer, does it?


RE: Do we really benefit from price cuts !
By crystal clear on 9/1/2007 2:24:18 PM , Rating: 2
If Michael Dell would be reading your comments now,he certainly would have hired you as his P.R. man.

You certainly have done a great job presenting Dell in the right manner ,even DELL P.R. would not have done so well.

Its 21.21 got to go -nice discussing with you.


RE: Do we really benefit from price cuts !
By TomZ on 9/1/2007 10:03:14 PM , Rating: 2
Thanks for your vote of confidence, but I would be a poor PR guy. The problem is that I'm too honest. That's the problem with being an engineer - we always have to tell you the facts. Oh well.


By crystal clear on 9/3/2007 12:13:33 AM , Rating: 2
There is a saying-(P.R.)

"Some people acquire it whilst some are born with it.

You have it in you.


RE: Do we really benefit from price cuts !
By masher2 (blog) on 9/1/2007 9:00:36 PM , Rating: 2
> "Why do Intel/AMD & others cut their prices ?"

To provide incentive for customers to purchase their products. Dell is a customer of Intel. If they buy more chips, Intel's price cut works...regardless of how much of that cut, if any, you see personally.

> "Its not fair that all those price cuts for components is used to boost their profits/revenues etc"

Yet you don't complain when component prices rise and the OEM eats the increase rather than raise retail prices. Or complain when OEMs cut prices when component prices haven't dropped, simply to garner more market share.

The market is very simple. If prices continue to drop, other OEMs will cut their prices, forcing Dell to do the same. Margins can't and don't increase without limit.

If think this unfair-- buy the components yourself, and build your own PC. Then you can benefit directly from those lower prices. Freedom is a wonderful thing.


By crystal clear on 9/1/2007 11:46:27 PM , Rating: 2
quote:
If think this unfair-- buy the components yourself, and build your own PC. Then you can benefit directly from those lower prices. Freedom is a wonderful thing.


As I clearly said in my opening comment-

Not everybody builds their own computers by buying components in the open market,rather the majority say 90%, are those ordinary buyers who want a computer-plug & play style



I can comment on the Israeli market-

Here we do get all the branded stuff-Dell,H.P.,lenovo,Apple
etc (consider Israeli - another a state of the USA when it comes to products/technology/life styles etc).

People here prefer to have their desktops custom made/tailor made-plenty of small scale businesses-mostly Russian immigrants who build you a very good rig at surprisingly low prices.

Made to order - name your components(all original stuff)-they build & give you with guarrantees.

Believe it or not ,some of them(Russians)I know are simply brilliant at what they do.

As for latops we have no choice but to buy the branded stuff.

One of those Russians I know says-"Dont worry we will build laptops also very soon-custom made-just name the components we will set it up".

Anyway pleasure reading your comments/responses.


By nah on 9/2/2007 4:40:51 AM , Rating: 2
this point is moot as prices of components have been on a downward spiral since about...the 70s, while performance has vastly increased thanks to competition, and the invisible hand of Adam Smith


By ToeCutter on 9/1/2007 11:28:07 AM , Rating: 2
quote:
set by the perceived value of the product, not based on the cost to produce the product.


Right on.

I've never understood why consumers are so fixated on production cost. If production costs go down, is the functionality of said product diminished at all?

(Answer: No)

Perfect example: People paying retail price for various gadgets on eBay! Why bid on an auction when you can easily find items for less in retail?!


By onereddog on 9/1/2007 8:36:01 PM , Rating: 2
It's actually the responsibility of any corporation to cater for it's shareholders. That is the point of the corporation concept.


By afkrotch on 9/1/2007 6:28:52 PM , Rating: 2
quote:
Quote crystal clear
Then why were those benefits of"lower component prices" not passed on to the buyers.

Why do component manufacturers lower prices???? so that OEMs can pass on those price cuts to the buyers to enable buy their products at even more cheaper prices.

I quite sure those price cuts that Intel/AMD & the rest announce & give are for the benefit of the BUYERS & NOT for OEMs to make more profits/revenue/income etc.

Its high time component manufacturers like Intel/AMD & OTHERS insist/ensure that their price cuts are passed on to the buyers in even more lower prices for desktops/laptops etc.

Price cuts announcements make good publicity for Intel/AMD etc-but in reality how much of those % price cuts are really transformed in more lower prices of the final product.

Not everybody builds their own computers by buying components in the open market,rather the majority say 90%, are those ordinary buyers who want a computer-plug & play style

Its high time OEMs lower their prices for their products even more & stop being greedy.


Ya, Intel and AMD price cuts are definitely aimed at the consumer. I mean, when a proc drops in price to $XXX for every 1000 procs, that's definitely directly aimed at consumers. I mean, what consumer doesn't buy 1000+ procs for themselves.

*is sarcastic*


"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson











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