Dell’s second-quarter earnings slide by 72%

Dell reported results that underscore the challenges facing the firm amid a decline in personal-computer sales, whatever the outcome of a vote next month on Michael Dell’s $24.9bn (€18.6bn) plan to go private.

Net income for the fiscal second quarter fell 72% to $204m, or 12c a share, from $732m, or 42c, a year earlier. Revenue for the quarter ended Aug 2 was little changed at $14.5bn. Analysts on average predicted profit of $275m on $14.2bn in sales.

The plunge in earnings bolsters the case made by Dell and Silver Lake Management LLC that shareholders should accept their proposal to restructure Dell as a private company.

While sales were helped by rising demand for servers and networking gear, the deteriorating state of Dell’s main business may deflate the case of billionaire activist shareholder Carl Icahn, who is arguing in court that he should be allowed to appoint directors, in order to keep Dell public and profit from his stake.

Shares were little changed in extended trading after the report from $13.71 at the close in New York. Profit excluding some items was 25c a share, compared with analysts’ average 24-c estimate.

Dell and Silver Lake are proposing a dividend of 13c a share on top of $13.75-a-share bid for the computer maker to boost their odds of winning shareholder support.