Dell's profit, stock drop on weak quarterly report
Dell
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Associated Press
SAN FRANCISCO — Some of the computer-industry's biggest players such as IBM Corp., Intel Corp. and Hewlett-Packard Co. – have wowed Wall Street this fall with stronger-than-expected profits.
Dell Inc. didn't join them Thursday.
The company, which in October announced that it is shuttering its Winston-Salem, N.C., plant that has been making desktop machines, reported a 54 percent drop in net income and a 15 percent decline in revenue in its latest quarter. Both were worse than analysts had forecast.
Dell's shares fell almost 6 percent in extended trading.
The numbers show that Dell isn't fully benefiting from the industry's fledgling recovery, even though the company is seeing improvement in some areas.
"We are already seeing more client activity in the last 30 to 60 days than we have in a long time," Michael Dell, the company's CEO, said on a conference call with analysts.
Dell has been hurt more than its peers because of tightened spending by corporations and large government agencies, which make up 80 percent of Dell's revenue.
Rivals such as Hewlett-Packard Co. and Acer Inc. have boosted their market shares by exploiting their bigger presence in retail stores. That has been a big weapon because consumer interest in little laptops called netbooks has helped the PC industry start to pull out of its worst slump in years.
In the last quarter, Acer replaced Dell as the world's No. 2 personal computer maker. Dell has said it is willing to lose some market share rather than lower prices too much. That is a key part of Dell's strategy to improve profitability, an effort that has included a huge restructuring.
Copyright 2010 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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