Beleaguered Dell reports 18% drop in earnings, cuts forecast as Windows PC market falters

“Dell Inc warned of a challenging second half and slashed its full-year earnings outlook as customers cut back on computer purchases ahead of the launch of Microsoft’s Windows 8 software, sending its shares down more than 4 percent,” Jim Finkle reports for Reuters.

MacDailyNews Take: Yeah, people are cutting back on Windows PC purchases ahead of Windows 8. Keep telling that to yourselves Windows PC assembler leeches/future roadkill.

“Dell – once the world’s top PC maker and a pioneer in computer supply chain management – is struggling to defend its market share against Asian rivals like Acer Inc and Lenovo, and the fast-growing adoption of tablets like Apple Inc’s iPad,” Finkle reports. “[Dell] on Tuesday forecast revenue would slide 2 percent to 5 percent in the fiscal third quarter from the second, to $13.8 billion to $14.2 billion. That lagged Wall Street’s target of $14.85 billion. It is predicting earnings per share of “at least” $1.70 for fiscal 2013, compared with a previous forecast for more than $2.13.”

“Dell reported fiscal second-quarter revenue of $14.5 billion, below the $14.64 billion analysts had expected on average, according to Thomson Reuters I/B/E/S,” Finkle reports. “It posted net income of $732 million or 42 cents a share in the fiscal second quarter, compared with $890 million or 48 cents a year earlier. Excluding certain items, it earned 50 cents a share, beating an average forecast for 45 cents.”

Read more in the full article here.

MacDailyNews Take: All together now!

[Thanks to MacDailyNews Reader “Dale E.” for the heads up.]

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    1. When the Microsoft mule panics on the narrow mountain path all of the partner mules get tossed off the path of profitability down the sheer precipice of failure and market rejection. Dangerous now that Microsoft now knows it needs to feed unique Microsoft branded merchandise in it’s stores like Apple does to avoid becoming a Best Buy type showroom. Look, but do not buy.

  1. Two points: 1) Do they analyst really think people in great numbers are holding back buying new computers in anticipation of Windows 8? I find that hard to believe. 2) This is what happens to a company when they are not able to truly innovate on an ongoing basis. It becomes a bigger difficulty, as people have noted, when you are tied to an OS that itself has not and cannot really evolve. I have said before that Dell was a one trick pony that has made Micky wealthy but it is not a company that has staying power.

    1. Dell tried to go the Walmart route by racing prices to the bottom, by demanding (and getting) lower prices from suppliers.

      But unlike Walmart, Dell has to make what they sell, and of course have a much smaller variety of wares. They can’t force themselves to a lower price once the bottom is hit like Walmart can to its suppliers.

  2. jimg is right – the old paradigm of consumers waiting for the latest Windows to upgrade is no longer proving to be true. The PC market has had strings of consecutive quarters of overall decline starting before Windows 7.

    The world has shifted.

    1. Well said both of you – the world is becoming increasingly fragmented in terms of what tools we can use, who can afford them, and what loyalties people have to various brands they used in the past. I think in part this is because amongst the people who can make choices, there is a great deal more knowledge gathered from their experience, what they learn in online communities, and other sources. The least effective source today is, frankly, advertising. It is as if most advertising has simply become a means of getting people’s attention but it has very little draw. People are getting smarter about their choices of computer hardware and software. I believe Microsoft is wasting its time putting out advance notices about its new operating system.

    2. Consumers are waiting for the new Apple desktops and retina laptops. MS Office 2010 is a complicated POS and so will Win 8 be.

      At some stage large companies will start to abandon Windoze.

  3. Unfortunately Dell are still making money, although it is a lot of work for them to make 5% profit from their sales.
    Saying that I would prefer them to keep in the black if only to have their worker still employed.

    1. Dell will soon be going back to it’s original college dorm origins operation selling in the dozens than millions. Mikey will wear a beanie and mostly sit in a very quiet dusty room by his lonesome waiting for orders with a loud clock ticking endlessly nearby…

  4. 1) MDN. Great take!

    2) Dell doesn’t need to fail for Apple to succeed, many of us may feel that way but it’s not true. And as DogGoneToo said, there are people’s jobs on the line at Dell, and it’s a tough market for new ones.

    3) what any of us hope for won’t change the outcome, market forces and the economy will be the reason companies fail or thrive (short of govt bailouts that is)

    4) Dell makes crap computers, regardless of the OS, they are not quality machines.

  5. samsung to Dell : “go copy Apple you morons. Judges don’t care, juries don’t care. Just copy. Do you own thing and die. “.

    at hearing Dells troubles Samsung CEO passed some of his famous sayings to Mikey Dell:

    “Morality is the biggest roadblock to success”
    “Great Artists Steal. RICH artists get away with it. “.
    “We treat Apple like Family. I don’t pay family members either when they work for me.. “.
    “Jonny Ive is the best designer that Samsung’s got”
    “Internally the codename for our new samsung android operating system is ‘The Fortstall’ ”
    “We’ve even banned all desserts from the samsung cafeteria except Apple Turnovers. We need keep reminding our employees where we get our cream and our desserts.. “.

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