“Dell Inc. said Thursday that its fiscal second-quarter earnings fell 17% from a year ago even as revenue topped $16 billion, as the company said its margins were hurt by efforts to build out its consumer product lines and overseas markets,” Rex Crum reports for MarketWatch.
“Dell said it earned $616 million, or 31 cents a share, on revenue of $16.43 billion, compared to a profit of $746 million, or 33 cents a share, on $14.78 billion in sales in the year-ago quarter. Analysts surveyed by FactSet Research had forecast Dell to earn 36 cents a share on $15.97 billion in sales,” Crum reports.
MacDailyNews Take: Boy, Mikey, that’s a lot of effort! $16.43 billion just to make $616 million? That’s quite the contrast from Apple which recently posted revenue of $7.46 billion and net quarterly profit of $1.07 billion for the quarter ended June 28, 2008. In other words, Dell has to generate 2.2 times the revenue just to make 58% of Apple’s profit. Not good.
It’s here. The beleaguered Dell, Inc. Twice the work. Half the profit. (Zing!)
Crum continues, “Dell didn’t give a third-quarter forecast, saying only that the company ‘sees continued conservatism in IT spending in the U.S.,’ which has begun to spread into Western Europe and parts of Asia.”
Full article here.
Ben Rooney reports for CNNMoney that Wall Street is “concerned about the company’s dwindling margins.”
“Dell’s gross margin was 17.2% in the quarter, down from nearly 20% a year ago. Gross margins measure a company’s profit after subtracting the cost of sales as a percentage of total revenue and is widely used by tech analysts as a benchmark for a company’s financial health,” Rooney reports. “‘Revenue was strong but margins were poor,” said Shaw Wu, an analyst at American Technology Research.”
Rooney reports, “Wu said Dell’s margins are probably being squeezed by a ‘lower-end mix,’ as the company used special promotions and other price reductions to entice customers to buy its computers.”
Full article here.
MacDailyNews Take: Keep squeezing those margins, Mikey. Until there’s nothing left. Does anyone have a solution for Mr. Dell?