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Dell misses targets, sees income plunge 54%

updated 05:25 pm EST, Thu November 19, 2009

Dell hurt by Acer, corporate fears

Dell today posted disappointing results for its latest quarter ended in October. The company saw its year-over-year revenue drop 15 percent to about $12.9 billion and its net income drop even further, falling 54 percent to $337 million. Both decreases were blamed on poor results both in the public sector and in its staple home PC business, where its shipments were up about 17 percent compared to a year earlier but its revenue was down 10 percent, an indication that many buyers were opting for less expensive PCs.

The revenue was significantly below analyst estimates that had expected Dell to generate $13.2 billion.

Dell itself is optimistic as it notes that it saw a small turnaround in its small/medium business and enterpise segments, all of which form the most important parts of its business. It expects Windows 7, which launched only at the very end of the quarter, to have a much larger impact in its November-to-January quarter as home customers, as well as smaller businesses, to buy PCs where they might have otherwise held off.

The Texas-based PC builder has been particularly hurt by recent circumstances for both the economy and the computer industry as a whole. This past quarter, it saw Acer pass it by in world market share as the Taiwanese firm's stronger focus on budget PCs, especially netbooks, gave it the edge. Also, corporate hesitation to adopt Windows Vista led to many companies avoiding their usual upgrades through Dell. Resistance to Vista at home has also partly hindered Dell's sales until now.




by MacNN Staff

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Comments

  1. Zaren

    Joined: Dec 1969

    +9

    Liquidate...

    something something investors...

  1. lkrupp

    Joined: Dec 1969

    +8

    Well, well, well...

    I can't tell you how satisfied I am at this news. Dell will eventually make some sort of recovery but I really think Mike has lost the golden touch. Apple is now worth over six times what Dell is and has proven unequivocally that people will pay more for value. Dell has catered to the bottom end and now it's biting them in the a$$.

  1. aristotles

    Joined: Dec 1969

    +10

    Time to shut down Dell

    Shut down Dell and return the money to the shareholders.

  1. climacs

    Joined: Dec 1969

    +5

    re: shut down Dell

    it's the only honest thing left to do.

    BWHAHAHAHAHAHAHAHAHA SUCK IT MICHAEL DELL

  1. sgirard

    Joined: Dec 1969

    +1

    Netbooks

    Netbooks are killing PC maker margins. Watch for similar news from HP and Acer.

  1. testudo

    Joined: Dec 1969

    +1

    Re: Well Well well

    Apple is now worth over six times what Dell is and has proven unequivocally that people will pay more for value.

    Let's see. They're still raking in twice as much money as Apple per quarter.

    And they're selling at least twice as many computers per quarter than Apple. I guess Apple has proven there are people who will 'pay more for value' (whatever the h*** that's supposed to mean), but that market is less than the market who's buying based on cost.

    Dell has catered to the bottom end and now it's biting them in the a$$.

    This is a plainly stupid argument. If Dell just built 'expensive' PCs, like Apple, they'd have even less market share. They might be able to sucker enough PC owners to allow them higher gross margins, but it is doubtful.

    The problem Dell has is competition. They actually have to compete against other computer makers in order to sell. You can't compare what Dell has to face with Apple. The last time Apple faced competition (i.e. clones), it almost killed them.

    But I'm sure if Apple allowed OS X to run on other machines, everyone would still buy Macs, because Mac users will pay for style, right? I mean, a lot of Mac users wouldn't just go and buy Dells running OS X because they're cheaper? That would never happen now, would it?

  1. testudo

    Joined: Dec 1969

    +1

    Shutting Dell down

    Of course it's hillarious, but no one seems to remember what it was like when he said this.

    At that time, Apple's market cap was LESS than their actual balance sheet value. Market cap, like $3 billion. Asset value: $5 billion.

    You might not like to think about it, but Apple was near death, bleeding money every quarter.

    Right now, Dell is still worth more in stock than asset, and they're still making money.

  1. Foe Hammer

    Joined: Dec 1969

    -2

    Well, well, well ... deep, deep, deep subject

    Quality products last a lot longer, are used a lot longer, have a higher resale value and are replaced far less often. (Perhaps whatever the h*** 'value' means has something to do with those.)

    So Dell's selling to the bottom end/uber cost-conscious market hit them for a 54% decrease, eh? Well, despite Menudo's point that they're still raking in over twice what Apple does, given the choice between betting on someone who turns $100 million into $200 million and someone who turned $1 billion into $460 million, I'd go with the former.

    "I mean, a lot of Mac users wouldn't just go and buy Dells running OS X because they're cheaper? That would never happen now, would it?"

    - Correct. A lot of Mac users would NOT go and buy Dells running OS X because they're cheaper. Mac users already know that quality involves the total package. The people who would go and buy Dells running OS X because they're cheaper are all the PC bargain hunters/cost-conscious/bottom enders who would still figure that cutting major corners on the cost of the hardware would still yield an overall equivalent product in terms of quality.

  1. c4rlob

    Joined: Dec 1969

    -1

    Not a smart business model

    Not really smart to run a business that is so heavily dependent on not just the availability, but the ample success of someone else's product - in this case Microsoft's operating system. And in Dell's case their only option has always been Microsoft - think about it - dumb.

  1. testudo

    Joined: Dec 1969

    0

    Re: Well well well

    - Correct. A lot of Mac users would NOT go and buy Dells running OS X because they're cheaper. Mac users already know that quality involves the total package. The people who would go and buy Dells running OS X because they're cheaper are all the PC bargain hunters/cost-conscious/bottom enders who would still figure that cutting major corners on the cost of the hardware would still yield an overall equivalent product in terms of quality.


    That's a boat load of c***. The problem is that most long-time Mac users know the truth: The quality of the computer is the OS it runs. Some mac fanboys and elitists would certainly still buy Macs, but Apple lacks anything close to choice or options. If you want an all-in-one with a 24" screen, sure, you'd get an iMac. But if you want a tower computer to hold 4-6 hard drives, and your choice is between something with waaaaay too much power for your needs (the MacPro) or a mid-range Dell at half the price, you'd get the Dell.

    And not every Mac owner is all about 'looks' first, and then worrying about minor details like capabilities, features, etc.

    And, again, I'm sure Apple was thinking back in the 90s "Oh, we won't lose too many people to clones. "

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