Dell shares slumped to a ten-year low after the firm issued a
profits warning yesterday.
The world's number two PC maker by volumes shipped said there
was a continuing decrease in end-user PC demand.
Dell said, "When Dell announced second quarter financial results
on 28 August, it reported continued conservatism in IT spending in
the US, which had extended into Western Europe and several
countries in Asia. The company is seeing further softening in
global end-user demand in the current quarter."
In the last year, Dell has seen its number one PC provider spot
usurped by Hewlett-Packard. HP recently posted better financial
results than Dell, but this week announced 26,000 redundancies as
part of its attempts to cut costs and integrate the £7.2bn
acquisition of EDS.
Dell said, "The company expects to incur costs as it realigns
its business to improve competitiveness, reduce headcount and
invest in infrastructure and acquisitions, but is committed to
working aggressively on cost initiatives, that will benefit its
profit and loss sheet over time with improved growth, profitability
and cash flow."
Dell has not denied reports that it plans to dispose of its PC
manufacturing plants in favour of using contract manufacturers to
cut costs. Such a move would lead to many thousands of redundancies
worldwide, including at its major facility near Limerick in the
Irish Republic.
Dell said the company "grew unit shipments faster than the
industry in the first half of calendar 2008, and expects to grow
faster than the industry for the full year". Dell, however, has
seen its profit margins slip.
Dell will post its third quarter results on 20 November.