Dell expects tough next quarter

Dell expects third-quarter revenue to be down between 2% and 5% on second-quarter levels due to the “uncertain economic environment”

PC maker Dell has warned that it expects third-quarter revenue to be down between 2% and 5% on second-quarter levels because of the “uncertain economic environment”.

Dell also blamed “competitive dynamics” and “soft consumer business” for its negative outlook for the third quarter, and said it expects a “challenging” user computer environment in the second half of the year.

The warnings came in second-quarter financial results in which Dell reported revenue of $14.5bn, down 8% on the same period a year ago and narrowly below the level that analysts had estimated.

Dell also saw its profits dive 33% in its first financial quarter of 2013 as consumer and large enterprise sales fell 12% and 3% respectively. Total sales in the first quarter were worth $14.4bn, compared with $15bn in the same quarter last year, a fall of 4%.

The second-quarter results caused Dell’s shares to fall by 3.7% in after-hours trading to $11.88, after closing at $12.34, according to the BBC.

Despite the warnings, Dell also said it expects continued solid growth in its enterprise solutions, services and software divisions.

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Dell Enterprise Solutions and Services revenue grew 6% year-on-year to $4.9bn, which the company said represents 50% of margin and more than a third of revenue. The company also reported growth of 14% in its server and networking revenues.

"We're transforming our business, not for a quarter or a fiscal year, but to deliver differentiated customer value for the long term," said Michael Dell, chairman and chief executive.

Brian Gladden, Dell chief financial officer, said: “Our performance in the second quarter provided another proof-point that our long-term strategy is right.

“We continued our progress in shifting the mix of our business to higher-margin enterprise solutions, led by solid growth in our server, networking, services, and Dell IP storage businesses.

“Growth in our PC business was challenging, as we saw a tough macro-economic and competitive environment, and continued to focus on higher-value solutions in this business,” Gladden said.




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