Dell’s sales de­clines amid PC- in­dus­try slump

The Pak Banker - - Front Page -


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.

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