Dell has seen its net profits drop 79% as consumers ditch PCs and laptops for smartphones and tablets. The PC maker’s net profit fell to $130m (£85m) in the three months to 3 May, on revenue down 2% to $14bn. Dell is in the middle of a dispute between founder Michael Dell and two of […]
Dell has seen its net profits drop 79% as consumers ditch PCs and laptops for smartphones and tablets.
The PC maker’s net profit fell to $130m (£85m) in the three months to 3 May, on revenue down 2% to $14bn.
Dell is in the middle of a dispute between founder Michael Dell and two of its biggest shareholders.
Mr Dell wants to take the company private, but some investors oppose the plan.
Mr Dell, and private equity group Silver Lake, have offered to buy back the company for $24.4bn, and have pledged to shift the business away from PCs to mobile devices.
But its biggest shareholders – the investor Carl Icahn and Southeastern Asset Management – have argued that the valuation of the company is too cheap, and that Mr Dell’s deal is a “giveaway”.
Instead, they have proposed to offer additional shares to shareholders and install mew management.
In its quarterly results, Dell said that revenue from new technologies, services and software, rose 12% to $5.5bn. That was in contrast to PC sales, which fell 9%.
The company did not issue a profit guidance for the second quarter due to the ongoing dispute. It has created a special committee of the board to study the private equity deal and alternative bids.
Commenting on the profit drop, Loizos Heracleous, Professor of Strategy at Warwick Business School, said: “Given that desktop computers are in the mature stage of the product life cycle in developed regions while tablet computers, software and services are in the growth stage in most regions, it makes sense for Dell to see how it can capitalise on this growth. Though It is highly likely that such a plan will be implemented after the takeover dispute reaches a resolution”
