Dell Earnings Disappoint as PC Sales, Windows 8 Fail to Save It
November 16, 2012 7:19 PM
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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.”
, 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,
, 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.
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RE: Windows 8 the savior ???
11/18/2012 12:31:55 AM
Perhaps the next console generation will push for better PCs. Sadly, one reason why the need for faster hardware has stagnated is that consoles are the primary target platform, thus lowering the ceiling for required hardware.
That's only one thing, of course. Envelope pushing games don't really sell anymore, just look at Crysis. It isn't like 2000 where people would go out of their way to get faster hardware to play Quake 3 very well. The most successful companies like Valve and Blizzard target a very wide range of hardware now, and the most successful game at the moment, League Of Legends, runs on pretty much anything.
I dunno, maybe the next console generation will push the PC end forward, but there's still a lot to be said for PC games that target a very wide range of hardware. Developers want to make money and the model of initial $50-$60 purchases is falling aside as free-to-play/microtransaction and subscription models take over. Volume matters most in that case, which means not going after uber-hardware. We'll see.
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