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Dell profit drops despite Windows 7 PC rush

updated 05:50 pm EST, Thu February 18, 2010

Dell Q4 2009 shows more PCs, less cash

Dell tonight reported mixed results for its latest quarter. Despite shipping 29 percent more PCs to home users between November and January versus the same timeframe a year ago, the Texas-based company's net profit ultimately dropped 5 percent as it focused on selling less expensive PCs. Its gross margin dropped to a relatively slim 16.6 percent as the holiday-related sales spike pushed it to sell 2 million more computers without as much profit as in the past.

Gains were spread across other areas of the company's business but were considerably closer to the industry average of about 15 percent. Small-to-medium business shipments were up 18 percent, but enterprise sales were up just 8 percent. PCs in the public sector were up 16 percent, but only because Dell could Dell could now count efforts by recent acquisition Perot Systems as part of its own.

Much of the surge in home PC numbers could be attributed to the launch of Windows 7 just a week before the quarter began, which triggered a similar spike for HP as customers waiting for the new Microsoft OS finally made purchases. A set of updates at CES also helped it spur sales in the post-holiday environment.

Dell's exact performance compared to HP is difficult to measure and is comparable in home PC sales but trails significantly behind when it includes all PC types, falling to 16 percent. The only other major American competitor, Apple, grew quickest of all for its last quarter of 2009 by shipping 33 percent more Macs than it did in late 2008.

For its future, Dell said it was "confident" but put most of its hope in the commercial business, as it hopes the economic recovery will lead to more sales. Both the fiscal world and a hesitation over Windows 7 have led many workplaces to avoid Windows 7 until they're confident it will run smoothly. Home sales weren't mentioned and have been cast into doubt as even Microsoft CEO Steve Ballmer expects only a short-term spike due to the new OS. Gambles like the Mini 3i smartphone and Mini 5 tablet also aren't yet known to pay off in the long run.



By Electronista Staff
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  1. solefald

    Fresh-Faced Recruit

    Joined: Oct 2008

    -1

    hm...

    i wonder if their S***** hardware has something to do with it.

    seeing how now days most people get rid of their desktops and get laptops, i can totally understand why their profits drop. Unlike most of Dell desktops, Dell laptops are useless cheap pieces of plastic.

    here is the quote to prove it:

    "Texas-based company's net profit ultimately dropped 5 percent as it focused on selling less expensive PCs"

    you know what "less expensive PC" means? Much cheaper parts but larger profit margin.

  1. peter02l

    Fresh-Faced Recruit

    Joined: Mar 2009

    +1

    Give Dell a break

    They are trying the best they can to eek out a profit. It is remarkable that in the midst of all this Microsoft can raise license fees for their new OS. Why don't these hardware makers demand a huge cut in OS price from Microsoft? It is not fair that hardware prices should drop so much over the last three decades, but OS cost actually go up. Even the economics of scale would mean that should be the case. Microsoft is robbing PC makers and they can't even do a thing about it.

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