Dell's shares slid by more than 4% on Tuesday night after the company announced second-quarter profits down 18% and revenues down 7.5%, and warned of a challenging second half to the year, for which it has slashed its earnings outlook, the Guardian writes.
A slump in PC sales hurt profits, and only the servers and network division saw revenues rise. Now Dell is pinning its hopes in the PC market on its favoured position as a tablet supplier in the first wave of Windows 8 products to be released this October
Once the world's top PC maker and a pioneer in the tight running of its supply chain, Dell now is struggling to defend its market share against Asian rivals including Acer and Lenovo, and the fast-growing adoption of tablets like Apple's iPad.
Founded by Michael Dell, its chief executive, it is trying to execute a turnaround, juggling acquisitions in the enterprise sector with the aim of bolstering growth with the need to fatten margins by trimming expenses even as global tech spending appears to be slipping. In May, it warned that global tech spending is weakening faster than anticipated.
The US's second-biggest PC maker, Dell on Tuesday forecast revenue would slide 2% to 5% in the fiscal third quarter from the second, to $13.8bn (£83.5bn) to $14.2bn. That lagged Wall Street's target of $14.85bn.
Lenovo particularly is now in Dell's rear-view mirror as it grows rapidly: last week it reported quarterly revenues of $8.01bn, up 35%, and net income of $141.4m. Its market share in PCs rose to 14.7%, almost level with the largest PC maker, HP, with 14.8%, according to Gartner.
More seriously for Dell, Lenovo is thriving in the smartphone market, selling 7m units in China – a segment where Dell has tried and repeatedly failed to compete successfully.
Now it is predicting earnings per share of "at least" $1.70 for fiscal 2013, compared with a previous forecast for more than $2.13.
"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.
To shore up margins and generate revenue growth, Dell is trying to expand further into enterprise computing, where it then goes up against HP, which has an edge in services.
On Tuesday, it announced that it had hired ex-HP networking chief Marius Haas to head up its enterprise solutions division and help hasten its push into global services.
