Shrinking PC Sales Impact Dell's 3Q Forecast

By Ashok Bindra August 22, 2012

With PC sales falling across the globe, Dell Inc.’s overall revenues are also shrinking. Hence, Bloomberg Businessweek reports that Dell’s revenue for the third quarter (3Q) has fallen below the analyst estimates.

Businessweek reported that with PC sales declining worldwide and global economic recovery slowing down, as well as strong competition from Apple’s iPads, Dell has dropped its profit outlook by 20 percent as 3Q forecast misses analysts’ estimates.

Dell’s strategy of using acquisitions to add software, storage and networking equipment has been slow to offset declining sales of desktops and laptops, which account for half of revenue. The report shows that consumers and businesses are increasingly adopting iPads and other tablet computers over traditional PCs and laptops.

 In a statement, Frank Gillett, an analyst at Forrester Research, said, “It’s a half-decade journey or more for Dell to transition from where they have been to more enterprise sales. It’s a long transformation project.”

 According to Businessweek, 18 percent of revenue was from consumers last quarter, it’s subject to long upgrade cycles for PCs running Microsoft operating system, noted Gillett. The next version, Windows 8, is due out in October.

The Forrester analyst thinks that in general companies are slow to do upgrades and they’re being even more conservative this time.

Dell’s chief financial officer Brian Gladden told analysts in a conference call on Tuesday that business customers are taking “a wait-and-see approach” on forthcoming tablets based on Windows 8.

 In a released statement, Dell reported that revenue in the current quarter that ends in October will decline two percent to five percent from the prior three-month period. That’s the equivalent of $13.8 billion to $14.2 billion in sales, less than the $14.9 billion average analyst estimate, according to data compiled by Bloomberg.

 Meanwhile, Businessweek report shows that Dell has agreed to buy software company Quest for approximately $2.4 billion. To gain desktop units used by cloud computing customers, Dell bought closely held Wyse Technology in May.

Edited by Amanda Ciccatelli

TechZone360 Contributor

Related Articles

Google Adds CBS to its Unplugged Roster

By: Steve Anderson    10/21/2016

Over-the-top Web-based television seems to be the way of the future, as demonstrated by Netflix, Hulu, and a host of developments to follow, along wit…

Read More

A New Stock Price High for Microsoft?

By: Steve Anderson    10/21/2016

It would be easy to think that Microsoft's stock price glory days were behind it, lost with the dot-com bubble and a little song called "Mambo No. 5."…

Read More

T-Mobile, FCC Reach 10-Figure Settlement Agreement

By: Steve Anderson    10/21/2016

It's a shot in the chops for T-Mobile, as the company recently agreed to a settlement with the Federal Communications Commission (FCC) over the matter…

Read More

DDoS Attack Causes Several Site Outages

By: Alicia Young    10/21/2016

This morning, as thousands of people woke up and started their daily routines, they found that it had been disrupted. Those who like to lie in bed scr…

Read More

Death by Hedge Funds: Why Samsung is Run by Idiots and They Aren't Alone

By: Rob Enderle    10/12/2016

Samsung is certainly having a bad quarter. First their halo product the Samsung Galaxy Note 7 starts blowing up or catching fire and they attempted th…

Read More