Dell reports 2 percent revenue growth, 18 percent fall in profits
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Texas-based manufacturer Dell Inc. recently announced its Q4 2011 sales performance with rather mixed results.
According to Business Week, Dell’s revenue during the winter season was up 2 percent from a year earlier, although profits declined by a rather large 18 percent during the same time period. Dell traces the cause of the profit drop to its home division’s group responsible for consumer products. Operating income from this particular workgroup was down by as much as 43 percent, meaning that general users have not been purchasing new Dell notebooks or netbooks as vigorously as before. Why this may be is still up for debate, whether it be due to the “iPad effect”, slowing economy or shrinking interests in netbooks and Dell notebooks in general.
Analyst Shaw Wu from Sterne Agee & Leach Inc. blames the profit fall on intense competition and points out Apple, Lenovo and Acer as major hurdles for Dell on the high-end, middle-level and entry-level markets, respectively. Dell recently pulled out or almost completely abandoned the netbook market as Ultrabooks have since taken center stage.
The poor performance of notebook sales on the consumer side of business reflects that of HP in late 2011. The manufacturer was temporarily contemplating spinning off or outright selling its Personal Systems Group (PSG), a move that HP eventually vetoed when the company realized that sales of its consumer products make up a large proportion of its revenue.