Beleaguered Dell faces grim outlook

“Dell dispensed a dose of reality to investors who hoped tech’s worst days were over. The computer maker said May 28 that first-quarter earnings tumbled 63%, and sales dropped 23%. On the heels of a tepid sales forecast from rival Hewlett-Packard last week, Dell’s report showed that corporations shied away from buying computers in recent months and that they’re holding off on placing new orders,” Aaron Ricadela reports for BusinessWeek.

“‘You’ll see a lot of bad news continue in the PC world for the time being,’ says Jayson Noland, a senior analyst at Robert W. Baird, who has a hold rating on Dell’s stock,” Ricadela reports.

“The pain was spread across Dell’s businesses. Desktop computer sales fell 34%, notebook sales were down 20%, and sales of corporate server computers declined 25%. Dell has been losing share in PCs to HP, now the No. 1 seller of PCs in the U.S. and worldwide. Dell also faces more vigorous competition from Taiwanese vendor Acer, which has been gaining share,” Ricadela reports.

“Dell’s share of the server market declined to 11% in the first quarter, according to market researcher IDC. Industrywide, server sales declined 24.5% during the quarter. In the 12 years that IDC has been keeping track, it was the worst period for [server] sales,” Ricadela reports. “Dell’s stock is down about 47% in the past year, declining further than those of IBM, Apple, HP, and Intel.”

More in the full article here.

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