“Dell has been in cost-cutting mode, focusing on profitability over growth during the downturn. It stayed clear of a price war in the PC market, and posted big market share losses as it protected its overall margin profile,” Madway reports. “But Dell reported an adjusted gross margin of 17.4 percent in the January quarter, down from 18.2 percent last year and below Wall Street’s expectations.”
“Chief Financial Officer Brian Gladden said gross margins were hurt by a larger mix of lower-cost PCs for consumers, and some higher component costs, including DRAM memory,” Madway reports. “But Gladden said there were positive overall signs in the technology industry, and that Dell is “cautiously optimistic” about how the new fiscal year is starting.”
“Dell, whose results had missed Wall Street targets for three of the previous eight quarters, said net profit fell to $334 million, or 17 cents a share, in its fiscal fourth quarter ended January 29, from $351 million, or 18 cents a share, in the year-ago period,” Madway reports. “Revenue rose 11 percent to $14.9 billion, also beating the average estimate of $13.8 billion.”
Madway reports, “Cross also said Dell’s operating expenses did not fall as much as some investors had hoped. Dell reported adjusted operating expense at 12.1 percent of revenue, versus 12.8 percent a year ago.”
Full article here.
MacDailyNews Take: It’s getting worse. This time around, beleaguered Dell could only manage to squeeze $334 million out of $14.9 billion. That’s a lot of effort for comparatively nothing. Contrast beleaguered Dell with Apple, which last quarter posted a profit of $3.38 billion on $15.68 billion. Dollar for dollar, Apple makes roughly 10 times what Dell makes. The net result is that Apple continues innovating and delighting customers while Dell continues closing box assembly factories and axing employees. This is how the race to the bottom – ironically, a race set up and started by beleaguered Dell – sputters to its natural end. Mikey, before it’s too late, SIDAGTMBTTS.
“Anyone who thinks Dell has a future is either Dell or smoking dope.”
Dell could make more money just by closing up shop and investing their remaining assets in a low-interest CD.
LMO
OK, sorry for the employees.
But LMO at Michael.
Do they not understand the word margin?
loopy_nj: Dell could make more money just by closing up shop and investing their remaining assets in a low-interest CD.
Or in Apple shares!
” width=”19″ height=”19″ alt=”wink” style=”border:0;” />
MDN word: turned – indeed!
Interestingly, they blame an inability to lower costs on the high price of DRAM. this is because Apple has basically bought up most of the DRAM for iPods and iPhones and soon iPads. Apple controls that market.
There isn’t much more to cut and they’re still spiralling the bowl! LOL!
Actually, DRAM and Nand Flash ram are not the same.
Dell is beyond beleaguered. The barbarians are no longer at the gates, they are running through the town burning and pillaging. A Federal bailout won’t be long in coming.
Oddly, I still meet people every day who won’t look at anything else. “Have you considered an X Serve” says I. “No, we need cheap and nasty,” say they. OK, have it your way. Good thing we only need it to last 18-24 months, ’cause that’s all it’s good for.
Would some analysis or reporter with balls please confront Mickie D. about his statement years ago about Apple. I think we all want to hear this one trick pony’s response.
More bad unemployment figures for Mr. O, who should cut taxes rather than jobs. It’s sad for those Dell workers. The only secure job is with the government: and we all know how much they produce.
@ron
Yeah, that’s exactly what we need to do, lower taxes, because we’re not on a fast track to third world status as it is with crumbling infrastructure, lousy health care, deplorable education, and an upper class that cares so little that all they want is more tax cuts.
Yeah, that’s the trick.
OK that wasn’t bad – 9 posts on topic before the typically idiot political post. Good job guys.
I’m waiting for Dell to start posting consistent losses. Their head is just above the water but soon they could be sinking.
Dell managed 18% margins but only have 5% profit compared to earnings. This basically means that they cannot let the margins drop below 13% or else they will post a loss.
They still have cash in the bank so have that to fall back onto.
With netbooks squeezing the low end and Apple coming from the top end, traditional box makers have nowhere to go.
Net profit of only $334 million out of $14.9 billion in revenue – that’s just a little more than 2 cents of profit out of every dollar. Talk about no margin for error…
@RicMac & Ron
I’d be willing to pay more taxes if we went to a flat tax with fewer/no deductions where everybody pays their fair share.
Oh, and they need to trim the Fed Budget by at least 15%
With Asian companies chasing their tails and to be honest some already leaving them in the dust there really is no where for Dell to go. Its probably when rather than if it hits the buffers. Anyone who says that Apple should go for the mass rather than the quality market are living in a far distant past, design, innovation, quality and added value is the only way to survive into a profitable future, like it or not, for western companies.
so sad
@Amazin1:
One trick pony. EXACTLY.
And now that we’ve all seen the trick, it’s time to put the pony out to pasture.
Buh bye, Mikey. Public Enemy said it a long time ago: “Shut ’em down, shut ’em shut ’em down.” SIDAGTMBTTS! It’s called karma, genius!
Peace.
” width=”19″ height=”19″ alt=”cool smile” style=”border:0;” />
Olmecmystic
Apple Ten Times more Profitable than Dell. See the graph and data at: http://www.asymco.com/Home/Blog/Entries/2010/2/18_Apple_Ten_Times_more_Profitable_than_Dell.html
From the outset, Dell defined itself as the computer for those who care about nothing but the lowest price. Amazingly, many so-called investment analysts thought this was a good business plan.
Yep–Dell is getting what it wished for. You go, Mikey!
The commoditisation of the PC box which was innovated by Dell has finally comes back to bite them hard.