Dell's Profit Falls on Slowing PC Sales

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SAN FRANCISCO -- Decades ago, Dell gained fame as a maker of affordable, customizable computers. But it missed the industrywide shift toward smartphones, tablets and the data centers that store information in the cloud.

The company's financial earnings report on Thursday reflected those mistakes.

Dell reported net income of $204 million for its fiscal second quarter, down 72 percent from the same quarter a year ago. Revenue was $14.5 billion, about flat from the same period a year ago, but better than the $14.18 billion that Wall Street had expected, according to a survey of analysts by Thomson Reuters.

On an adjusted basis, Dell's net income was 25 cents a share, a penny better than expectations, according to Thomson Reuters.

"In a challenging environment, we remain committed to our strategy and our customers, and we're encouraged by increasing customer interest in our end-to-end solutions offerings and continued growth in our Enterprise Solutions, Services and Software businesses," Brian Gladden, Dell's chief financial officer, said in a statement.

Dell's shrinking income mirrors slowing sales of personal computers, at a time when many people are buying tablets instead. To keep sales up, Dell cut prices for many of its products, but sacrificed profit margins.

The company reported earnings amid a controversial proposal from its founder, Michael Dell, to take the company private. His plan is to refocus the company on cloud computing by selling crucial components like networking hardware, servers, storage and software, without the pressure of Wall Street.

Mr. Dell's offer has run up against opposition, namely from Carl C. Icahn, the billionaire activist investor who says the founder is trying to buy the company for less than it is worth. The company's shareholders are scheduled to vote on Mr. Dell's bid of $13.65 a share on Sept. 12.

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This article originally appeared in The New York Times.


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