Dell feels pinch as tablet sales rocket

Dell forecast third-quarter revenues that missed analysts’ estimates as its personal computer business dwindles amid a slow global economic recovery and an influx of tablet computers that has eaten into sales.

Revenue in the fiscal third quarter ending in October will decline 2% to 5% from the prior three-month period, the Texas-based company said in a statement. That is the equivalent of $13.8bn (€11bn) to $14.2bn in sales, less than the $14.9bn average analyst estimate, according to data compiled by Bloomberg.

Chief executive Michael 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 more than half of revenue. Consumers and businesses increasingly favour tablet computers such as Apple’s iPad over traditional machines.

“In PCs, price pressure continues, and the iPad isn’t helping,” said Shaw Wu, an analyst at Sterne Agee & Leach in San Francisco.

Dell fell in extended trading after closing down 1.8% to $12.34 in New York. The shares have lost 16% this year.

Second-quarter net income fell to $732m, or 42 cents a share, from $890m, or 48 cents, a year earlier. Earnings excluding some items were 50 cents a share, compared with an average analyst estimate of 45 cents.

— Bloomberg


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