Dell Q3 Earnings Dismal; Profit Plunges 54%

Dell, in its Q3 earnings report to the street, reported significant declines in its business sales groups, leading to a Year-over-year decline in profits of 54% or ($390M).

The computer industry is all about market share. Dell’s report fueled reports that not only is Dell’s world-wide market share decreasing, but its losses are worse that expected. Dell’s consumer business was the only area that saw units increase year-over-year (17%) , however, declining average selling prices (ASPs) in the industry still saw consumer revenues decrease by 10% over the same period last year.

Unlike its competition, Dell blamed some of the losses on the recent Windows 7 launch. This contradicted Microsoft’s CEO Steve Ballmer’s comments later in the day in which he stated that “We’ve already sold twice as many units as any OS in a comparable time frame”.  Any issues related to the Windows 7 launch seem isolated to Dell based on this and other news reports.

Michael Dell has had over two years now to confront the changes in the PC industry and try to guide Dell on a positive path. One can blame the recession and other factors, however, time seems to be running short as other companies in the industry are performing well and stealing share from the former #1 computer OEM. Its reliance on commercial sales in mature markets underlines that Dell may not be positioned to tackle the consumer and small business sales opportunities in smaller, emerging countries. It will be interesting to see what recourse Michael Dell has to get Dell back on track.