Dell hits rough patch, but is optimistic about future

By on August 28, 2009, 5:39 PM
Despite Dell's sharp decline in revenue during the second quarter, the PC maker said things are looking up. The company reported a profit decline of 23% to $472 million ($.24 per share), and 22% less sales during the May-July period. Sales to corporations fell 32% year-over-year to $3.3 billion, meanwhile consumer PC shipments rose 17% - mostly due to price cuts.

Dell's outlook is similar to other big names in the industry, including HP and Intel. They have all reported that consumers are making their way back to the stores, but corporations are still penny-pinching. Dell believes that may not change until 2010. Analysts are looking to next year for renewed company budgets and hope Windows 7 will stimulate sales.

About 80% of Dell's business comes from sales to corporations, government agencies, and other institutions. Company CEO Michael Dell expects things to look a bit brighter in the second half of the year, if the current demand trends continue. However, Dell's profits will continue to be subject to aggressive pricing and rising component costs.

Given Dell's dependency on corporate sales, rivals like HP and Acer who place more emphasis on the consumer market have fared better. HP and Acer have gained market share, while Dell has lost footing. In an effort to reduce spending and regain its ground, the company has trimmed its staff by some 9,300 and has restructured its business units.

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