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 PC manufacturer said it would look to improve its financial situation, possibly explaining its broadened relationship with AMD, also announced Thursday.
So…
Dell starts being unfaithful to Intel and sleeps a little in AMD’s bed… and profits drop…
And now Dell announced they are broadening their relationship with AMD… I predict further drops, followed by Dell going AMD exclusive and Dell going out of business
As if the profit hadn’t plumeted without the AMD relationship:-)
Dell should have started selling AMD systems when the kind of blow-out that happened when the dual-core Opterons went up against the MCM-based dual-core Xeons took place.Now the margin is arguably less significant.
If I were put in charge of Dell I’d shut it down and give the money back to the shareholders. 😉
When Athlon was king of preformance/price , Dell went with Intel. When Intel finally looks to have a good product, Dell goes for AMD…
Twilight Zone.
> When Athlon was king of preformance/price , Dell went with Intel. When Intel finally looks to have a good product, Dell goes for AMD…
Perhaps they feel they can get a better price from AMD *and* Intel if they stop playing the Loyal Intel Customer and start shopping around?
The same strategy that works so well for consumers browsing pricewatch.com may also work for Dell. After all, isn’t that what a free market is supposed to be about?
Possible factors causing decrease in profit for Dell.
1. Delay from Intel releasing Merom an Intel Core 2 Duo mobile processor which is to offer EMT64 and virtulization. While this may not seem important to some, there are consumers who realize technology is shifting towards 64-bit. Merom is to be backwards compatible with 32-bit applications so it offers more value than Yonah Intel’s current mobile Core Duo processor.
2. Dell’s announcement for a wide battery recall due to a few exploding defective batteries. While it’s good Dell made this decision in concerns for consumer safety their announcment does impact on the way consumers view the products Dell sells.
1. … there are consumers who realize technology is shifting towards 64-bit. Merom is to be backwards compatible with 32-bit applications so it offers more value than Yonah Intel’s current mobile Core Duo processor.
I’m one of them .. Even though I really like the 640m, I’m waiting to see Dell’s Core2 Duo offerings, and decided that I won’t buy anything up until then.
2. Dell’s announcement for a wide battery recall … their announcment does impact on the way consumers view the products Dell sells.
And that just *can’t* get away without hitting their revenues(after *and* before the recall takes place)… That’s not only bad publicity but also means that some corp (presumably the batteries manufacturer in the end) just lost *a lot* of money. It also means litigation (not knowing exactly “which” corp just lost money brings FUD and we all know how that affects corporates figures) and all that shows up in numbers.
I totally agree with you.
Possible factors causing decrease in profit for Dell.
1. Delay from Intel releasing Merom an Intel Core 2 Duo mobile processor which is to offer EMT64 and virtulization. While this may not seem important to some, there are consumers who realize technology is shifting towards 64-bit. Merom is to be backwards compatible with 32-bit applications so it offers more value than Yonah Intel’s current mobile Core Duo processor.
2. Dell’s announcement for a wide battery recall due to a few exploding defective batteries. While it’s good Dell made this decision in concerns for consumer safety their announcment does impact on the way consumers view the products Dell sells.
Realistically speaking the delay for Core2 has a negligible impact on it’s market, since it is hardly representative of their bread and butter base.
And the battery recall happened well after the quarter results were finalized, so there’s no impact there. It’s bad publicity but it’s short term. This isn’t the first time Dell has had a recall (or HP, or IBM, or Toshiba, or, dare I say, Apple) and there’s rarely a long term impact on revenue, merely on profitability due to the costs incurred. In fact, since these batteries were actually manufactured by Sony, I imagine they’ll be bearing the brunt of the recall/replacement costs.
The article explained where Dell was seeing the shortfall:
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
Enterprise sales are down. As someone that works in the enterprise sales, I can personally attest to that.
Growth is in the consumer space, and the consumer space is far more competitive hence lower profit business.
So you have a decrease in the core enterprise business with an increase in the less profitable consumer business. That’s not a good news story.
Compare to Apple, who is focused on the consumer space and therefore better able to reap the rewards of an increasing consumer market.
This isn’t particular to Dell, since HP and Lenovo are also experiencing weak performance. Anybody relying on enterprise sales is.
Just wanted to throw a little perspective into this.
Maybe the sales dropped because people are afraid to buy dells thinking something might happen to them after learning about the laptop fiasco
Edited 2006-08-19 07:30