Dell sales miss estimates as consumer spending slumps

DELL, the second-largest personal-computer maker, last night reported second- quarter sales that missed analysts’ estimates, hurt by a slump in desktop PC and consumer spending.

Sales rose less than 1% to $15.7 billion (€10.9bn), the Texas-based company said in a statement.

Analysts had estimated revenue of $15.8bn, according to Bloomberg data.

Lacklustre demand from consumers and market-share gains by Apple weighed on results, offsetting stronger spending on server computers. Among home computer shoppers, tablets and smartphones may have sapped demand for PCs.

However, even if consumer spending comes back, Dell may struggle to win a big enough share of those orders, said Bill Kreher, an analyst at Edward Jones.

“Dell is benefitting from a corporate refresh cycle today,” said Mr Kreher, who has a ‘hold’ rating on Dell shares. “Over time, as that wanes and consumer begins to be more of the overall mix within personal computing, we believe their current market share is at risk.”

The company also cut its full-year revenue forecast, citing “a more uncertain demand environment” and a strategy shift aimed at boosting sales of higher-margin products.

Dell declined in late trading after posting the results. The shares, up 17% this year, had risen 30 cents to $15.80 in regular Nasdaq trading.

The company has been making acquisitions to expand in data storage, networking and software, seeking more profitable sources of growth.

On July 20, Dell announced plans to buy networking company Force10 Networks, which it said had about $200 million in sales. Dell is trying to get more money from the data-centre market as consumers hold the line on technology spending.

Second-quarter profit rose to $890m, or 48 cents a share, from $545m, or 28 cents, a year earlier. Excluding some costs, profit was 54 cents a share in the period, which ended July 29. Analysts had projected 49 cents.