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Dell Cuts Growth Forecast Despite Profit Rise

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Dell has cut its growth forecast for the rest of 2011 due to "a more uncertain demand environment" despite posting net income which was up by 63 per cent.

Dell announced its second quarter results last night, and the figures for the Texas-based PC manufacturer were lower than analysts expectations (but only just) and along with the downgrading of its forecast for the rest of 2011, led to shares in company slipping by 7.65 per cent to $14.60 in after-hours trading.

Dell reported revenue of $15.7 billion for the quarter ending 31 July, up from $15.5bn for the same period last year. Net income was up a huge 63 per cent year-on-year from $545 million to $890m. According to Associated Press, this jump in revenue and profit was down to a number of large corporate and government contracts.

Despite these results, Dell, the number two PC manufacturer in the world, cut its full-year revenue growth estimate to just 1 to 5 per cent, down from previous estimates of 5 to 9 per cent. The reason for this downgrading is growing uncertainty about whether government and corporate spending can hold up in the face of flagging economic growth.

The number one PC manufacturer, HP, is due to announce its second quarter results on Thursday.  Because HP is a more diversified company and more reliant on consumers, who are currently not spending money with the possibility of a double-dip recession on the cards, growth predictions for the rest of 2011 could be as bad if not worse than Dell.

Source: Dell

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