Dell sees profit shrink by 72 percent

Posted on Friday, Aug 16 2013 @ 14:34 CEST by Thomas De Maesschalck
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BitTech writes Dell saw its fiscal second quarter profit decline to $204 million, a whopping 72 percent less than the same quarter the year before. Curiously, the company's revenus remains relatively unchanged at $14.5 billion, meaning that the company has taken a massive hit on its profit margin by focusing on volume shipments of low-cost, low-margin devices.
A clear example of the impact of the continuing decline in traditional PC sales, Dell's decline can be directly traced to its decision to ditch smartphones and tablets. Its rival Lenovo, in its own most recent filing, boasted of a 23 per cent increase in profits - thanks, in no small part, to a whopping 105 per cent revenue boost in its tablet and smartphone division.

Investors are taking Dell's news in their stride, however. While the announcement itself caused a panic-selling dip in the share price, by the close of trading the value had stabilised just 0.11 per cent down - although this increased to 0.4 per cent in after-market trading. The reason seems clear: Michael Dell's plan to buy back all public shares and take the company private, which promises a bumper payday for investors if they stick around for the papers to be signed.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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