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Dell’s woes continued to mount on Thursday after the world’s second-biggest personal computer maker reported falling sales and profits and warned of several tough quarters ahead.
The results underscored the challenges facing the company as it struggles to regain its footing amid fierce competition from Hewlett-Packard and an erosion in cost advantage that has blunted the advantages of its direct sales model.
Michael Dell, who this year replaced Kevin Rollins as chief executive in an attempt to revive the company, said it was “disappointed” with the quarter’s results.
But Dell, which sells computers directly to customers over the telephone and online, on Thursday said its turnround was “under way”.
Although the company was eager to tout its progress in revamping business units, Mr Dell, who founded the company in his University of Texas room in the 1980s, on Thursday repeated earlier warnings that Dell faced a long struggle to regain lost momentum.
“We will be known again for strong operating and financial performance and a great experience for our customers,” said Mr Dell. “But it will take time to realise the future benefits of the improvements we are making today.”
Dell on Thursday said it was in the midst of a “transformational effort” that was likely to put pressure on growth and margins “in the next several quarters”.
Sales in the fourth quarter were $14.4bn, down 5 per cent compared with the same period a year ago. The company made a net profit of $673m, or 30 cents a share, down from $1bn, or 43 cents, last time.
Revenues came in below most analysts’ already-dim expectations, while net income – boosted by a lack of bonus payments– beat forecasts. Shares of Dell fell 1.9 per cent to $23.01 in after-hours trading.