Dell shares plummet following IT spending predictions

18 Sep 2008

Dell shares are officially at a seven-year low. Soon after the global PC manufacturer warned of “further softening” for IT demand in the US – which it said has spread to western Europe and some Asian countries – the value of stocks dropped by over 10pc.

While the firm said it would continue to expand in its five priorities of SMBs, global consumers, enterprise, notebooks and the emerging countries, this did nothing to stem investor negativity.

On late Tuesday, Dell shares fell by 11.2pc (€2.01) on NASAQ, bringing them close to a seven-year low of US$15.98 according to Forbes.

This follows in the heels of disappointing second-quarter results in which the firm reported a 17pc drop in profit.

With earlier news this week that HP, the world’s largest IT company, is planning to give 7.5pc of its global workforce the chop over the next three years, the technology sector seemed to be waking up to an economic downturn.

However, HP shares did not suffer the same fate as Dell – in fact, Tuesday saw a rise of 6.8pc on the market, displaying investor confidence in the decision to cut costs through gradual layoffs.

How these events come into effect close to home has not yet been played out; while a spokesperson for HP Ireland said it was not yet known how the jobs cuts would eventually affect its operations in Leixlip or Galway, there has been growing speculation that Dell may sell its Limerick plant following a Wall Street Journal report, which claimed that Dell executives have been mulling over this decision for some time.

By Marie Boran