More bad news for Dell

On the heels of its recall of 4 million laptop PC batteries, Dell reported more bad news Aug. 17. Shares of the world's biggest PC maker fell nearly 10 percent after the company announced that its second-quarter profits had dropped and that the Securities and Exchange Commission was investigating some of its accounting practices.

Dell stock was down 9.8 percent when trading ended yesterday after the company reported that its second-quarter profits had fallen 51 percent, to $502 million.

Net income fell from 41 cents a share, or $1.02 billion, a year ago to 22 cents a share, the company said. Sales were up 5 percent to $14.1 billion in the quarter that ended Aug. 4.

Kevin Rollins, Dell's chief executive officer, said in a statement that the company had aggressively cut prices last quarter to match competitors.

But Dell's chief competitor, Hewlett-Packard, reported better-than-expected quarterly earnings yesterday of $1.5 billion, or 48 cents a share, for the third quarter of its fiscal year. HP reported quarterly earnings of 52 cents a share, excluding one-time charges -- considerably higher than analysts' predictions of 47 cents a share.

Bloomberg attributed Dell's decline in part to the company having alienated its customers with poor service and its failure to offer PCs with faster, more efficient chips.

Early trading today on the Nasdaq Stock Market pushed Dell shares up to $22.80 from an opening price of $22.25. The stock, which is down 24 percent overall this year, has been as high as $37.05 in the past year.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.


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