Dell shares dive as it struggles to grow income
COMPUTER manufacturer Dell last night forecast disappointing second-quarter revenue as US and European corporate tech-spending weakens and consumer personal computer sales continue to shrink.
Its shares dived more than nine per cent in after hours trading.
Dell, like rival Hewlett-Packard, is losing market share to mobile devices such as Apple’s iPad as consumers choose to buy tablets rather than laptops.
The world’s third biggest PC maker forecast revenue growth of between two and four per cent in the next fiscal quarter – equivalent to income of $14.7bn and $15bn (£9.3bn and £9.5bn) – well short of Wall Street’s expectations.
“Clearly we are seeing a bit more challenging demand environment,” Dell’s chief financial officer Brian Gladden said. “Europe, in general, was down for us.”
But he added demand from US federal businesses appears to be improving slightly: “We are seeing a pretty good pipeline there.”
Dell’s quarterly revenue fell more than analysts had expected and sales to consumers took a big hit, with consumer revenue slipping 12 per cent to $3bn. Sales to large corporations fell three per cent to $4.4bn.
The firm revenue in its fiscal first quarter declined four per cent to $14.4bn. Net income fell to $635m from $945m a year earlier.
The firm is attempting to reinvent itself as service provider, with 50 per cent of its gross margin coming from its enterprise and services business.
Dell’s shares traded at $13.50 after hours, down from yesterday’s $15.08 close on Nasdaq.