Dell's outlook disappoints and PC market falters

City A.M. Reporter
Dell 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 four per cent.

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 and Lenovo, and the fast-growing adoption of tablets like Apple’s iPad.

Founded by chief executive Michael Dell, it is in the midst of a turnaround, juggling acquisitions to bolster growth with the need to fatten margins by trimming expenses even as global tech spending appears to be slipping. In May, it warned that global tech spending is weakening faster than anticipated.

The US PC maker yesterday forecast revenue would slide two per cent to five per cent in the fiscal third quarter from the second, to between $13.8bn (£8.8bn) and $14.2bn. That lagged Wall Street's target of $14.85bn.

It is predicting earnings per share of "at least" $1.70 for fiscal 2013, compared with a previous forecast for more than $2.13.

"People had already expected them to take down numbers, but I think the level to which they are taking down numbers is pretty severe compared to expectations," said Cross Research analyst Shannon Cross.