Dell has warned of a challenging six months and slashed its full-year earnings outlook as customers cut back on PC purchases ahead of the launch of Windows 8.
Dell – once the world’s top PC maker and a pioneer in computer supply chain management – is struggling to defend its market share against Asian rivals such as Acer and Lenovo, and the fast-growing adoption of tablets such as the iPad.
The company is in the midst of an overhaul and warned the that revenue could fall by up to 5%, casting a shadow over the PC industry and worrying investors.
The revenue deterioration we saw in the quarter was clearly above anything we expected
“People had already expected them to take down numbers, but I think the level to which they are taking down numbers is pretty severe compared to expectations,” said Cross Research analyst Shannon Cross.
According to Dell chief financial officer Brian Gladden, Dell scaled back its forecasts because it expects distributors to hold off buying new computers before the late-October release of the latest version of Windows.
“The revenue deterioration we saw in the quarter was clearly above anything we expected,” he said.
Enterprise hope
To shore up margins and generate revenue growth, Dell is trying to expand further into enterprise computing, where it then goes up against larger rival HP.
Enterprise solutions revenue rose 6% to $4.9 billion or more than a third of overall sales, while server and networking revenue climbed 14%. In contrast, consumer revenue plummeted 22% to $2.6 billion, underscoring the plight of the broader PC market.
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