RSSDell Profit Tumbles, Target of SEC Probe
By Ed Oswald | Published August 17, 2006, 6:02 PM
Dell's quarterly profit plummeted 51 percent in the second quarter, and the company disclosed it was the target of a Securities and Exchange Commission investigation into the ways it is reporting its revenue.
The Round Rock, Texas based PC manufacturer said it would look to improve its financial situation, possibly explaining its broadened relationship with AMD, also announced Thursday.
The company's profit was still fairly healthy at $502 million or 22 cents a share, however this was far off the $1.02 billion or 41 cent per share profit recorded for the same period last year. Revenues increased a modest five percent to $14.09 billion from $13.43 billion.
"While we are disappointed with the results for the quarter, we are taking the necessary actions to correct missteps and improve our results for the long term," Dell CEO Kevin Rollins said in a statement. "Key actions include accelerating cost initiatives, increasing investments in service and support, and better pricing management."
Rollins indicated that the company's financial issues had a lot to do with a slowing PC market and price cuts that cut into overall profit margins. With most of the growth now on the consumer side of the market, Dell has struggled since a large portion of its business relies on enterprise sales.
Along with the disappointing numbers, Dell also disclosed it was the target of an investigation into how it reported revenues in past fiscal years. Dell indicated it was cooperating with the SEC, and said at this time the government did not say it was in violation of any laws. An internal investigation is underway.
The news was not all negative for Dell; the company also announced an expansion of its partnership with AMD. Dimension desktop computers with AMD processors will be available next month, with two-socket and multi-processor AMD Opteron Dell servers due by the end of the year
Dell's pricing structure never made sence. Very often the combination cost of the components on the worlds brokerage markets would be more than the sale price. this even includes a heavily discounted copy of Windows/Intel chip. Are there serious losses hidden in there somewhere ???????
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|Two words: supplier discounts.
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|They cheated in the earnings report. That's why!
Tell you what? DELL is dying.
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|The issue is that Apple has proved that the whole JIT-inventory approach used by Dell, Gateway and HP is worn out and lacks innovation, creativity and consumer-oriented appeal. Gateway and HP are at least making a small attempt to appear innovative, while Dell just keeps cranking out the same trash with new plastic cases that look like a kids toy from a fast-food meal box. Where are the "mac-mini" clones from the PC world? Sure, A-Open tried to market one, but none of the PC morons would buy into it. Apple did and it took off. Holy cow: Lenovo, now a Chinese entity, is showing more signs of innovation than any of the U.S. counterparts by releasing a high-end Linux laptop. Geez. We're slipping bad.
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|Oh, and by the way, Apple just had their second best quarter EVER.
(sprays DELL fanboy repellant and sits back to watch the little fanboys dance for me, LOL)
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|ROTFL!!
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|GCoder -
Your comment is indicative of the kind of responses MAC users give. Always smarmy and self rightous. And before you go on your lil Mac (y) jihad, yes I too own a Imac. That being said, a MAC or PC is just a tool. It just seems that Mac-oids are ultra fanactical about thiers.
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|No I dont own a MAC smartazz...
I run linux/windows
(oh and by the way, you just danced like I knew you would. Keep dancing for me monkey!)
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|"Smartazz"?
Apparently spelling isn't your forte.
Nor is witty comments....keep trying though.
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|Wow! All he does is state a fact (albeit out of place) and it engenders a rant like this! Wow! But YOUR response does unfortunately give some credance to your claim about Mac fanatics.
Now THIS is entertainment! :))
Ironically, Dell has thus far done much of this on their on. But it should be interesting to watch the much speculated strategic positioning of Apple as 'the PC that can also do the Mac' versus 'just the PC'. I expect Apple to gain significant market share.
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|HAHAHAHAHAHAHAHAHA! Serves them right for sucking so much.
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|The problem here is simple , their customer support has gone to sh*t , I hear it everyday.
Americans do not want to speak with outsourced support "technicians" PERIOD.
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|One wouldn't need to talk to someone in India if the computer worked in the first place.
Also, Dell seems to be moving tech support centers back to the US.
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|Enron?
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|The revenue figures shouldn't be that much of a shock to anyone in the industry, especially as the trades have been reporting and predicting this for quite a while now.
Additionally there has also been the speculation that one reason Apple has not released a general version of OSX for the PC is that Apple is aiming at taking a bite out of Dell with the strategic positioning of the Apple branded PC having a unique capability of running Windows, OSX, etc., either in a dual boot or concurrent 'value added' manner while Dell is more limited.
Personally, I wish Apple would release OSX in an unsupported form for PC, but the above scenario presents a Very interesting business strategy in the short run. Besides, they can always release OSX for the general PC market anytime thereafter.
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|The investigation has been ongoing since August of 2005, according to the dell article (http://www.dell.com/cont...=us&l=en&s=corp). They only now released the info, but just giving a heads up as the BN article didn't clarify that...
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|It has been ongoing for a year and the information has just now been released!?!?!?!?! The next article you read will justifiably be the shareholders' suit.
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