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Dell's profit fell 47 percent to 39 cents per share while revenue dropped 11 percent to $13.7 billion

Dell's financial report for the third quarter seems to have missed the targets predicted by Wall Street on many levels due to sluggish PC sales.

For Q3 2012, Dell's profit fell 47 percent to 39 cents per share while revenue dropped 11 percent to $13.7 billion from a year previous (Wall Street expected $13.9 billion). Its net income fell from $893 million (49 cents per share) in Q3 2011 to $475 million (27 cents per share) in Q3 2012.

A large reason for Dell's financial tumble is the lack of demand for PC upgrades. Dell's PC shipments fell 8.3 percent in Q3 2012 from a year earlier.

“In a difficult global IT spending environment we saw solid proof points that demonstrate progress in our strategy,” said Brian Gladden, Dell CFO. “A highlight has been the strong progress of our newly introduced servers, with our server and networking business up 11 percent. We’re also encouraged by early interest in our new Windows 8 touch portfolio and the opportunities it creates for our commercial and consumer businesses.”

Looking forward, Dell predicts a fourth quarter revenue of $14 billion to $14.4 billion, which is a bit less than the $14.5 billion analysts were shooting for. In Q4 2011, revenue was $16 billion.

In response to all of this disappointing news, Dell stock dropped to $8.81 this morning, which is the lowest its been since March 12, 2009.

While Dell is looking to Windows 8 for some kind of revival, the new operating system hasn't provided any immediate boost for PC makers. In fact, Gladden said Windows 8 wouldn't affect Dell's financial results for the next two quarters.

"The client business continues to be challenging," said Gladden. "Commercial customers tend to be lagging adopters of a new operating system. They're going to wait."

To make matters worse, Microsoft doesn't solely depend on PC makers for hardware anymore. Last month, it released its first tablet hardware, Surface RT, which features the RT version of the Windows 8 mobile OS. Next year, Microsoft plans to release the Surface Pro, which will run Windows 8 Pro.

Source: Dell

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By kleinma on 11/16/2012 10:39:28 PM , Rating: 5
Step 1 to turning things around: Stop making crap.

RE: well
By FlyBri on 11/17/2012 8:53:28 AM , Rating: 2
Amen to that. Also, they need to get some half decent customer service, or even understand what customer service is. I'm convinced there is a culture problem at Dell. I ended up having to take them to small claims court due to them refusing to service my laptop while it was still under warranty. They didn't do the right thing at any point in the whole ordeal - not after the countless hours with managers both here and in India, after filing a complaint with the Better Business Bureau, and even after I went to court, refused to give a decent settlement.

Not only that, but I also spoke with and "executive level" person at their corporate headquarters, and they were rude enough to accuse me of "trying to blackmail them" (which, when I reacted to that comment the woman immediately started backpedaling and profusely apologizing). Worst experience ever. If my story doesn't sum up what is wrong with Dell, I don't know what does.

RE: well
By JPForums on 11/19/2012 10:51:07 AM , Rating: 2
Thank you for that.
Another shining example of customer service that I can use dissuade people from choosing Dell. (I've been collecting them)
This makes 8 stories of this level I can tell.
So yes, this does in fact point to a culture problem at Dell.

RE: well
By crispbp04 on 11/17/2012 12:46:11 PM , Rating: 2
this goes for most lazy PC makers. It was easy when nobody innovated and everything looked like crap. It was a simple formula. 1) make a sh*t PC with subpar parts. 2) sell it at a 40% margin. 3) profit.

The only pc companies being creative today are Asus, Lenovo, and to a lesser extent Samsung. Everyone else is missing the boat.

RE: well
By TakinYourPoints on 11/18/2012 11:21:10 PM , Rating: 2
Amazingly, racing to the bottom hasn't been a long-term winning strategy. Companies that are doing well are Lenovo and Apple, ones that haven't cut corners on quality or customer service. Asus also seems to be turning it around with the Zenbook Prime.

HP/Dell/Gateway/Acer/etc have become associated with crap because that's all they've turned out in the consumer market, and all people see them good for now are cheap machines with razor thin profit margins. It is a downward spiral of crap that they've trapped themselves into.

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton
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