It was not a good second quarter for Dell (NASDAQ:
), as the company dropped up to 13% in German trading after
reporting revenue that missed analyst expectations.
Dell reported that revenue for the quarter ending July will be
between $14.7 billion and $15 billion. The average estimate came
in at $15.4 billion.
Dell's president, Steve Felice, said in a conference call that
this forecast alongside disappointing first quarter sales, are a
direct result of the fact that the Dell sales team has been
focusing on individual products rather than packages of hardware
This is an interesting way to look at the miss. Every sales
team in the world will tell you that the key to success is to
upsell. If a customer wants something, the average sales
representative will tell you that you need more. It's hard to
imagine that the Dell sales team was not doing that. It's far
easier to imagine that the current economic climate has been
restricting consumers' ability to purchase more than what they
CEO Michael Dell said pretty much that very thing. "In my own
interactions with larger customers, we are seeing a delay and
pause in spending activity. Corporations are still adopting
The numbers don't make for happy reading, with shares dropping
down to $13.3 in U.S. trading late on Tuesday. Dell stock had
climbed 3.1% previously in 2012.
1Q net income came in at $635 million, or 36 cents per share,
compared with $945 million, or 49 cents per share, the previous
year. Swing that whichever way you want, but that's a startling
decline. Sales fell 4% to $14.4 billion compared with the average
estimate of $14.9 billion.
Dell has to start thinking, and fast. The company needs to
innovate, because its notebook sales are dropping like a lead
balloon thanks to competition from Apple's (NASDAQ:
) iPhone and iPad, and other similar mobile devices. Dell is
being left behind.
Dell is now the third biggest computer maker behind Gartner
) and the market leader Hewlett-Packard (NYSE:
). Consumers are holding off buying a PC this year as they wait
for Microsoft's (NASDAQ:
) Windows 8 to drop but Dell absolutely should not be looking at
that product as a saving grace as all of the manufacturers will
feel the benefits of that.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.