Dell’s profit gets a thumping as the PC business continues to struggle
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| Dell XPS, one of its recent releases. |
The PC maker’s net profit fell to $732m for Q2 – a fall of 18% on last year – as the consumer PC business gets tough.
Revenue also fell 8% to $14.5 billion in the second quarter of fiscal 2013, blamed on a decline in desktop and mobility revenue streams.
“Growth in our PC business was challenging, as we saw a tough macroeconomic and competitive environment, and continued to focus on higher-value solutions in this business,” said Brian Gladden, Dell’s chief financial officer.
Dell’s operating income also stumbled 21% to $901m and year-on-year was down 27%.
Consumer revenue also went soft, down 22% to $2.6 bn, as demand for must-have items like iPads and tablets drive computer demand at the expense of notebooks and traditional PCs – Dell’s main computing strength.
However, Dell enjoyed growth in its thriving server, software and networking businesses, which saved profits from a worse hammering.
Its ‘Enterprise Solutions and Services’ revenue grew 6% year over year to $4.9 billion and the business now accounts more than one third of the company’s revenue.
“We continued our progress in shifting the mix of our business to higher-margin enterprise solutions, led by solid growth in our server, networking, services, and Dell IP storage businesses, ” said Gladden.
Chairman Michael Dell isn’t too phased by the slump in profits saying: “we’re transforming our business, not for a quarter or a fiscal year, but to deliver differentiated customer value for the long term.”
“We’re clear on our strategy and we’re building a leading portfolio of solutions to help our customers achieve their goals.”
Dell has made six acquisitions so far this year and has closed five of the deals as operation transformation gets underway.
The IT giant expects continued solid growth in enterprise solutions and software business, but expects no change to the “challenging” end-user PC environment in H2.
Dell expects third-quarter revenue to be down 2-5 percent from second-quarter levels, due to uncertain economic environment, increased competition and soft consumer business.
