Dell’s profits plunge 17 per cent

Dell’s profits took a hammering in the second quarter as the PC giant’s EMEA pricing blitz took its toll on the bottom line.

Although revenues were up 11 per cent year on year to $16.4bn, net profit fell back 17 per cent to $616 million. The steep drop sent shockwaves through Wall Street and Dell’s share price plunged by 12 per cent.

Dell admitted gross margins, which dropped to 17.2 per cent, were adversely affected by actions to drive growth in strategic areas, such as consumer and EMEA.

Brian Gladden, chief financial officer at Dell, said: “Strategic actions to accelerate growth in certain areas of our business affected gross margins this quarter and there will be some non-linearity in the improvements in our operating income margins as we rebalance our portfolio, make cost improvements and drive growth.”

Chief executive Michael Dell remained defiant. “We have our most competitive product portfolio ever – whether for digital nomads or hyper-scaled data centres.

“Our growth at a multiple of the industry across all major product categories for the second consecutive quarter affirms we are on track with our five key business priorities – notebooks, consumer, enterprise, SMB and emerging countries.”

See also:

DSGi, HP and Dell clinch NHS deal

Trio win OCG-backed tender to supply over 60,000 PCs to six NHS buying hubs  15 Aug 2008

Dell praises channel after hitting green targets

Vendor becomes carbon neutral ahead of schedule and stresses that the channel has a vital part to play  07 Aug 2008

EMEA PC market hits growth high

Unit shipments in the region rocketed 23.5 per cent in Q2 as average prices continued to plummet, according to Gartner  17 Jul 2008

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