Dell’s profits fall ahead of $24bn buyout deal

DELL’S profits fell by almost a third in the final quarter of 2012, the company revealed last night, in what may well be its final public report before the computer maker is taken private.

The firm, which is set to be bought out by founder Michael Dell and private equity company Silverlake Partners for $24bn (£15.6bn), saw profits decline by 31 per cent to $530m on an 11 per cent drop in turnover to $14.3bn.

Dell has been one of the PC manufacturers worst hit by a global slowdown in sales as consumers instead spend on tablets and smartphones.

It is also struggling to compete with new competition from China’s Lenovo, which is expected to overtake HP to become the world’s biggest PC manufacturer this year.

Sales in Dell’s consumer arm fell by 24 per cent in the final quarter of the year, while operating profits in the division slumped by 87 per cent. Slow economic conditions in Europe were partially responsible for the decline, with group sales in the EMEA region down 14 per cent in the quarter.

The firm’s enterprise software, a target for growth, did well however. Since Dell’s board announced the proposed sale, several big shareholders have come out against the deal, claiming it undervalues the company.

Investors holding around 14 per cent of Dell have said they plan to vote against the deal, although it is still believed the buyout will go ahead, even if it is at an altered price.

Dell’s shares are currently trading at above the $13.65 price proposed by Michael Dell, who founded the company in 1984 and took it public in 1988.