“Dell Inc. said Thursday that its fiscal second-quarter earnings fell 17% from a year ago even as revenue topped $16 billion, as the company said its margins were hurt by efforts to build out its consumer product lines and overseas markets,” Rex Crum reports for MarketWatch.
“Dell said it earned $616 million, or 31 cents a share, on revenue of $16.43 billion, compared to a profit of $746 million, or 33 cents a share, on $14.78 billion in sales in the year-ago quarter. Analysts surveyed by FactSet Research had forecast Dell to earn 36 cents a share on $15.97 billion in sales,” Crum reports.
MacDailyNews Take: Boy, Mikey, that’s a lot of effort! $16.43 billion just to make $616 million? That’s quite the contrast from Apple which recently posted revenue of $7.46 billion and net quarterly profit of $1.07 billion for the quarter ended June 28, 2008. In other words, Dell has to generate 2.2 times the revenue just to make 58% of Apple’s profit. Not good.
It’s here. The beleaguered Dell, Inc. Twice the work. Half the profit. (Zing!)
Crum continues, “Dell didn’t give a third-quarter forecast, saying only that the company ‘sees continued conservatism in IT spending in the U.S.,’ which has begun to spread into Western Europe and parts of Asia.”
Full article here.
Ben Rooney reports for CNNMoney that Wall Street is “concerned about the company’s dwindling margins.”
“Dell’s gross margin was 17.2% in the quarter, down from nearly 20% a year ago. Gross margins measure a company’s profit after subtracting the cost of sales as a percentage of total revenue and is widely used by tech analysts as a benchmark for a company’s financial health,” Rooney reports. “‘Revenue was strong but margins were poor,” said Shaw Wu, an analyst at American Technology Research.”
Rooney reports, “Wu said Dell’s margins are probably being squeezed by a ‘lower-end mix,’ as the company used special promotions and other price reductions to entice customers to buy its computers.”
Full article here.
MacDailyNews Take: Keep squeezing those margins, Mikey. Until there’s nothing left. Does anyone have a solution for Mr. Dell?
Shut it down and give the money back to the shareholders!
SIDAGTMBTTS!
(Shut It Down and Give the Money Back to the Shareholders!)
Right on cue, Mr. Mertz!
Isn’t Dell expecting a profit soon from its newest division, Psystar?
I concur:
Shut it down and give the money back to the shareholders!
You ladies can gloat, chortle and be all smug-like but Dell’s being down 10 percent in after hours is going to drag the entire Nasdaq tomorrow and AAPL with it, too. Down under 170, I predict.
So so sad.
Where is the asshole claiming “Apple Tax” at now? It is called profit. When you have a great product, people will pay for it because IT IS WORTH IT! Paying little, and getting shit is just wasting money. Buy a quality product, and you will have to pay for it, and be happy. Buy shit, pay less for it… put up with crap. This is the exact reason I did not buy another Chevy again.
The Dude abides.
@Ms. Dell,
Even if AAPL drops below $170, which I doubt will happen, big chicken fried deal!
Michael Dell is the poster boy for mediocrity.
Mr. Dell,
Thanks for the buying opportunity. For AAPL, that is. Only a fool would invest in a dying PC box assembler that can’t run Mac OS X.
What would I do? I’d shut it down and give the money back to the shareholders, you brillo-haired, cross-eyed, globe-headed fuck.
We’ll make it up in volume. Or not.
SIDAGTMBTTS!
Ding dong Dell, things aren’t going well.
Oh, shit – that photo of Dell, the headline, and this:
It’s here. The beleaguered Dell, Inc. Twice the work. Half the profit. (Zing!)
Laughing my ass off right now!!!
Karma’s a bitch, ain’t it?
“Be kind to people on the way up, because those are the same people you’ll run into on your way down.” That’s how I was raised; Mikey-boy, not so much.
Oh, well. Another one-trick-pony who’s done his trick. Nothing else to see here.
Peace.
” width=”19″ height=”19″ alt=”cool smile” style=”border:0;” />
Olmecmystic
P.S. And what’s with that picture of him? Doesn’t he look mystified, like “WTF is going on?”
Anyone who didn’t see this happening has to be blind. Once they started selling their computers in Wal-Mart and Staples, margins would have to go down to allow room for the retailers to make some profit. By abandoning their direct sales model, I think they doomed themselves. Before long, they will be like Gateway.
Never mind, it will all be fixed now they emply Rob Enderle to show them how to beat Apple..
But doesn’t Dell have that cool new PMP player coming out..that’ll turn things around.
And why is Dell wanting to spend the money to get in to the portable Music player market again?
dell just began selling 250 dollar computers in India and China and if this quarter is any indication of what the next one will be like, it means even smaller profit margins.
Dollars to donuts, the Chinese buy up dell just like they bought out IBM’s PC business.
hahahaha..i love mdn =)
“Dollars to donuts . . .”
You just got Rob Glaser’s attention.
Dell figured out how to squeeze margins, logistics, warehousing, suppliers, etc., before everyone else in the internet age.
But then everyone else figured out how to do the same thing.
So why do we need Dell anymore?
My solution: Keep hiring the best like Enderle and keep the company going until someone else has to shut it down and there is no money left to give to the shareholders.
LOOHTL
(Last one out, hit the lights)
I know a few people who own Dells. They’re all cheap.
That kind of exiguous, grinding cheapness that casts an aura of angst, and bitter feelings.
Yuck!
My organization, a mental health agency, uses nothing but POS
Dells, and they are total junk. I especially like their “creative,”
unforgettable names, like Dimension and Vostro (ooh, that’s a
catchy one!). I have a 22″ Viewsonic monitor
accompanying my Dull, and it warns me at least 5x a day that
I’m not using the best resolution for the monitor, which is by
choice, by the way. The dialog box that pops up tells me to push
‘1’ to hide the box or ‘2’ to disable it. Well, guess what folks, no
matter how many times I push those keys, nothing happens!
Mind you, having this pop up isn’t the worst thing that can
happen to me, but it is annoying to have to stop my flow of work
to wait the 10 seconds for it to disappear on its own.
Also, when I give my Dull the “three fingered salute” to log back
on, oftentimes (at least 1x a day), the left half inch of the
desktop disappears off the edge of the screen, and the only way
to alleviate the problem is to reboot. What a steaming pile of
Vista it is (even though we run XP exclusively, with no plans to
‘upgrade’ to the steaming pile).
Bought two Dell laptops for my daughters over the past 4 years. They last about 2 years and then are throw away. My Mom’s still running my wife’s old G400 Tower from ~1995. What does that say?
Psystar’s only hope is to get buy up by Dell, and symbiotically if Psystar does not win, Dell is in Deep Doodoo. Dell has one trick and one trick only – imitate then produce cheaper. It can offshore all the labor it wants, but about now the offshore based companies took a looks and said, hey, we can make the same PCs even better than Dell and cheaper still. Take Lenovo, Acer, Eee, etc. Ironically, I think Dell will survive for a while imitating new models coming from Apple, for those customers who want the look, but not the price, until they realize they don’t have the same functionality and performance. Then Dell will be Done.
Don’t be so hard on Mikey, he has no choice but to use Billy’s Windows operating system. That Bully Steve won’t share Mac OS with him. It is not really Dell’s fault that he has only mediocre computers to sell.
Yup, time to liquidate and give what he can back to his shareholders. What goes around comes around.
Buy a Dell and burn in Hell!
(Same goes for, Acer, eMachine, and Lenovo!)
i think steve jobs should offer to license OSX exclusively to Dell.
here me out before you all judge me.
then at the last minute, pull out of the deal and watch Mike shit his pants. fuhahahahhaah
Shut It Down
Shut It Down
Shut It Down
Shut It Down
Shut It Down
Shut It Down
Shut It Down
Shut It Down
and all other forms of ass too, but lets get real here. So margins are down by 3% (17 from 20 last quarter) but revenue was up, and they still made a profit, 616 MILLION dollars, and that in the midst of the worst economic downturn in 20 years……
All things considered, I’m not sure why the analistas are at it again whining about stuff being down and off of the ‘predictions’ Everything is off and down, so why don’t the anal-istas make their predictions lower and more in line with the realities of the economy?
Butt munchers like Dell are the worst of the worst bottom feeders, but anytime a company turns a profit in an economy like this, they shouldn’t be punished by the anal-istas, and we should cheer their success. Plenty of time to see them go under and roast in hell when our economy isn’t failing.
he he he he he he he he he he he he he
he said butt munchers are bottom feeders, getit? BOTTOM feeders!
Comedy gold that one…..
Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell Beleaguered Dell
(miss me?)
-c
I have an idea for him….
Sell the company and give the money back to the shareholders…
**chuckling**
John in Fairbanks
Selling software gives a higher gross margin than selling hardware. Selling a mix gives a gross margin somewhere in the middle. Explanation to MDN and others who are surprised: cost of sales for software includes a DVD and some nice packaging, cost of sales for hardware includes CPU, GPU, RAM, LCD etc and a lot of injection molded plastics.
Dell: Gross margin 18.88%
Apple: Gross margin 34.08%
Microsoft: Gross margin 80.80%
Looking at profit follows the same pattern (millions USD):
Apple 1,072 net income on 7,464 total revenue.
Microsoft 4,297 net income on 15,837 total revenue.
Finally, a quick conclusion in MDN style:
It’s here. The beleaguered Apple. Half the work. Quarter the profit.
http://www.reuters.com/finance/stocks/ratios?rpc=66&symbol=AAPL.O
http://finance.google.com/finance?q=NASDAQ:AAPL
Gotta love MDN’s photo.
Yes, Mikey, your sky IS falling!
On the conference call at 17:00 ET, DELL execs indicates that the reason for the margin shortfall is that that making a strategic investment in price cuts in the EMEA (Europe, Middle East, and Africa) geographic region.
These price cuts are intended to boost revenue and profit, which they expect to book and recognize in forthcoming quarters.
However, the investment has to come first, and hence the margins declined this past quarter.
DELL execs emphasized that this was a voluntary and strategic decision on their part, and it was not necessarily driven by competitive pressures.
No further details of the investment or future revenues or profit were given. DELL typically does not issue earnings or revenue or margin guidance for future quarter.
This explanation — strategic investment in price cuts in EMEA to drive future revenue and profit — may or may not fly with investors in future quarters. It will presumably hinge on actual signs of improvement in EMEA business.
For today, though, the market doesn’t seem too happy with the earnings miss and the reduced margins. Investors never like to see margins dropping. DELL shares dropped in after hours trading to a low of $22.41 and ended at $22.64.
In the forthcoming days, watch the price action. If the stock tries to rally, it may run into resistance in the $23.00 and $23.50 area, which were the stock’s previous support levels and probably will now become resistance levels. If DELL fails to rise convincingly above $23.00 and $23.50 tomorrow and early to mid-next week, it may make new lows in the forthcoming weeks as investors continue to sell.
One huge caveat on all the above: The share volume of today’s trading is light. This is because we are in the late August timeframe and in the runup to the start of the Labor Day weekend, when many traders and investors are on vacation. So any and all price movements — both up and down — are suspect until tested and proved in a more liquid trading environment.
Of course, DELL’s CFO would have known that trading volume would be light in the late summer timeframe, and I suspect that may be one reason why they scheduled their earnings release for August 28th, when few investors are paying attention.
Keep squeezing those margins, Mikey. Until there’s nothing left.
Already there.
Seriously, what compelling feature does Dell offer besides cost?
<crickets chirping>
Thought so.
Once you’ve achieved bottom-feeder status, there’s no way out.
Squeeze those pennies, Mike. You’ll need all of them.
Twice the work. Half the profit!
GOD the folks at Dell must be simply exhausted and now they have to do it all again in order to lose more of the shareholders hard earned money!
Wait does Dell even have any stockholders left?
What’s next buy a Dell at a fire sale price and get a laptop or two for free or do they pay me to take the free one!
I think the time is near at hand to close the doors and hand over any remainning money to the few shareholders who are left and call it a day!
Mike retirement is in your future, where you know it or not!
Shit guess what the MDN Magic Word is for this one?
“FREE” no kidding but timely!
Who else here would like to see ODonnell & Maddow kiss one another?
Whu, huh? What? Did I say that out loud?
C1
Yes.
ChrissyOne…
Where you been?
In a few quarters Dell will not be even making a profit. The signs are there. It is wasn’t for the fact that people will lose jobs as result, I would be really happy to hear them lose money.
All I can say is this:
http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewAlbum?i=252039712&id=252039711&s=143441
Mike,
Eat Shit.
-Steve
My question is how soon can Apple buy Dell
BayouGator… wow your wife shore is smart, cuz she bought a PowerMac G4 4 years before they were officially released in September of 1999!
Dell, Dell, go to HELL!
I’m trying SOOOOOOOOOOOOOOOOOOOO hard NOT to gloat.
This shows that of those customers who can afford a good computer an increasing number are buying Macs. Dell is left with having to sell to the sub-$700 (low margin) market. There they took market share, which means the rest of the PC makers are likely even worse off.
It should be interesting to see how hp and Lenovo have fared this quarter.
My question is how soon can Apple buy Dell
About as soon as Toyota can buy Ford.
Why would Apple want Dell, other than to kill it?
Dell seems to be dying quite well by itself….
The Market Share Myth!!!
Market Share is the biggest bullshit ever created and suckers like Dell are suffering for it.
Firms are in business to make profits nothing less nothing more. This bull about dominating competitors is just that, bull, especially if it is to be achieved by sacrificing margins to the extent Dell has gone. Apple will grow profits and in the process market share because they make products people want to use.
Whereas Dell has to reduce margins to sell their junk because people know that PCs are shit. It also does not help Dell that Microcrap screws them as they do while selling an upside down shit that is Windows.
To the fools who were trolling MDN not so long ago gloating about Dells market share, a useless and misleading number: What say you clueless asshats?
But but but…only the DELL comes with the DELL DOCK (see picture in article):
http://online.wsj.com/article/SB121970813304271145.html
Original and innovative. Because the standard Vista desktop was too “clean” for Michael Dell.
It gives me a sound idea. Maybe by Leona Lewis:
Squeezing Dell
Keep squeezing, keep squeezing…
I am not gloating because Dell is a competitor with Apple and they have fallen on bad times. I am gloating because they are a competitor who said and did malicious, arrogant crap about Apple and are now getting what they deserve.
This only serves to show that Dell basically doesn’t sell anything to anybody above $500. And the profit margins on selling a ton of sub $500 systems is so puny that you can’t make decent profits from it at all. They truly are the bargain bin of the PC world and they obviously sell nothing but junk.
@C1…Miss you? Hell I wasn’t even shooting at you…..lol
Of course I do ….a ray of light (and wit) has re-entered!
Oh, and Apple never ever should let Dell have access to OSX. Imagine the complaints about how crappy OSX is due to cheap Dell boxes screwing up. Nothing to do with the OS but they wouldn’t know that.
Nope…bye bye Mikey…was nice knowing you….now take a long walk a short pier.
OH Boy!
Wait until Dell has to mark down / write off all those computers sitting in Wall Mart et al. They are heading to a model that is essentially break even at best.
Today’s price action in DELL has not been encouraging.
The stock opened this morning at $22.26, and couldn’t rise at all, hitting a high of $22.39 — which is below yesterday’s after-hours low of $22.41, and far below the previous support (and now resistance) levels at $23.00 and $23.50.
As a result, look for DELL to make new lows next week as the selling continues, interspersed with some short squeezes.
For those who may be tempted to gloat at DELL’s problems, note that DELL has dragged down the entire PC sector, including AAPL (which is testings its 50-day exponential moving average), as well as the tech-heavy NASDAQ index.
Caveat repeated: Today is the final trading day before the Labor Day weekend, and trading volume is quite low. All price moves are therefore suspect, until and unless confirmed in a more liquid trading environment.
RC writes: “This only serves to show that Dell basically doesn’t sell anything to anybody above $500.”
This is simply not true. The margin pressures that DELL is currently facing arise from aggressive price reductions on computers sold to the *enterprise* market in EMEA (Europe, Middle East, and Africa). Not the consumer market.
Enterprise customers typically buy servers and desktops with lots of peripherals, as well as notebooks, all of which command higher prices and fatter margins than products aimed at consumer markets.
Basically, DELL realized that enterprise customers in EMEA were not buying DELL products because they were priced too high, as compared to DELL’s competitors.
So the notion that DELL sells only sub-$500 PCs is false, especially in enterprise markets.
Doesn’t that photo of Mike Dell look like he just got rear-ended?
I can hear the duelin banjo’s now…..
“Does anyone have a solution for Mr. Dell?”
He will find it sooner or later.