Dell sees profits plummet amid hardware freefall

Dell saw profits plummet by 73% to $226m (£149m), as its first quarter results revealed its hardware division's profits to be in freefall

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Dell saw profits plummet by 73% to $226m (£149m), as its first quarter (Q1) results revealed its hardware division's profits to be in freefall.

Profits in the company’s end-user computing business shrank from representing 61% of overall profits in the 2012 May quarter, to just 31% for the same period in 2013.

The Dell Services division now contributes more than half of overall profits, compared with one-third in the first quarter of 2012, while Dell’s Enterprise Solutions arm composes 19% of overall profits, compared with 7%.

Overall sales for the period dropped 2% to $14.1bn.

The news comes as founder Michael Dell is attempting to take company off the stock market and transform it into a software, services and cloud business.  

The results also reflect a global fall in PC sales, with the latest PC shipment figures from Gartner reporting the worst quarterly decline since the firm began tracking the market.

Brian Gladden, Dell chief financial officer (CFO) said: “We made progress in building our enterprise solutions capabilities in the first quarter and are confident in our strategy to be the leading provider of end-to-end scalable solutions.”

He said: “In addition, we have taken actions to improve our competitive position in key areas of the business, especially in end-user computing, and it has affected profitability. We’ll also continue to make important investments to support our strategy and drive long-term profitability.”

The company said it could not provide an outlook for its second quarter, while talks of taking the company private are ongoing.

 

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