Last month Dell blew its earnings goals and warned of lousy times ahead: It said IT spending was no longer bad just in the U.S., but that the malaise was spreading across Europe and parts of Asia, too. Three weeks later, the company feels compelled to put out a press release reiterating the same point. It’s not changing guidance. But it is pointing out that its problems aren’t going to get fixed by a new line of PCs, no matter how nice they look.
When Dell announced Q2 financial results on Aug. 28, 2008, it reported continued conservatism in IT spending in the U.S., which had extended into Western Europe and several countries in Asia. The company is seeing further softening in global end-user demand in the current quarter.
Dell will continue to execute against its five growth priorities of global consumer, small and medium business, enterprise, notebooks and emerging countries. The company expects to incur costs as it realigns its business to improve competitiveness, reduce headcount and invest in infrastructure and acquisitions, but is committed to working aggressively on cost initiatives that will benefit its P&L over time with improved growth, profitability and cash flow. The company grew unit shipments faster than the industry in the first half of calendar 2008 and expects to grow faster than the industry for the full year.
How can things turn bad enough to justify another warning in the span of three weeks? Dell CFO Brian Gladden explained at the Bank Of America investor conference today: August was terrible, and September hasn’t improved.
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