Dell’s sales declines amid PC- industry slump
Dell Inc. (DELL) forecast a fourth straight quarter of declining sales as diminishing demand for personal computers overshadows the company’s efforts to diversify into more profitable products for data centers.
Fiscal fourth-quarter revenue will be $14 billion to $14.4 billion, the Round Rock, Texasbased company indicated in a statement yesterday. That’s less than the $14.5 billion average estimate of analysts, according to data compiled by Bloomberg. In last year’s fourth quarter, revenue was $16 billion.
Dell, the No. 3 PC maker, is struggling amid a deep slump in demand as companies wait to upgrade machines and consumers turn to smartphones and tablets like Apple Inc.’s iPad and iPhone to manage their work and personal lives. Even as Chief Executive Officer Michael Dell works to mitigate the decline by adding storage, networking gear, software and services through acquisitions, the company still gets half its sales from PCs.
“They’ve been talking about changing the last five years,” said Shaw Wu, an analyst at Sterne Agee & Leach Inc., who has a neutral rating on the shares. “They’re in a very tough position, plain and simple.”
Dell shares slipped as much as 3.9 percent to $9.19 in extended trading after the report. They declined less than 1 percent to $9.56 at yesterday’s close in New York. The stock has dropped 35 percent this year, compared with a 7.2 percent gain in the Standard & Poor’s 500 Information Technology Index. PC shipments tumbled 8.3 percent in the calendar third quarter from a year earlier, according to market researcher Gartner Inc., and are projected to decline this year for the first time since 2001, according to IHS iSuppli. Dell has spent $12.7 billion on 17 acquisitions since 2009, adding products for corporate data centers to lessen its reliance on PCs. Sales in Dell’s fiscal third quarter.