You’d think that Dell has hit the skids. Quarterly profits were down 33 percent with no upswing in sight. The company founded by Michael Dell had forecast better returns. Revenue dropped by four percent. Shares saw a 12 percent dip. Dell has been run over by a big truck called the economy.
A Dell PC looks like road kill after being run over by current circumstance Artistic Design Credit: Dennis Talbott
Also, supply chain woes caused by Thailand’s floods still plague the industry, including Dell. Slow sales all around – from consumers like you and me to large corporations – are also blamed for sickly financial statements in many computer companies. For example, HP announced plans to layoff 27,000 in the next 17 months, including 5,000 early retirements.
Although Dell PC's are one half of its business, they only represent a small percentage of its profit. PC sales in the industry in general are slow. Tablets are giving the traditional computer a run for its money.
Dell has been on a shopping spree acquiring diverse companies to bolster its product line. They’ve looked to storage systems and security software to increase the bottom line. However, expenditures for those companies come at their own cost. For example, acquiring SonicWall known for its firewall and threat management offerings could empty their pockets by over $1 billion. Dell is also bringing Wyse Technology into its fold for its cloud client computing ability. HP, as well, is planning to focus on cloud computing.
Acquisitions are always a challenge for corporations. Blending multiple corporate cultures into one entity is at best a rocky proposition, at worst it isn’t successful at all. Acknowledging this, Dell CFO Brian Gladden didn’t place all the blame on the economy. What’s going on inside Dell contributed to the malaise. He told the WSJ "We have to execute better."
© 2009 - 2011 Bright Side Of News*, All rights reserved.