Dell slashes revenue forecast for rest of year

17 Aug 2011

Technology giant Dell has slashed its revenue forecast for the rest of the year. Shares slid 8pc last night after it reported sales and earnings that fell short of Wall Street expectations.

Dell cut its full-year revenue growth estimate to a range of 1pc-5pc from 5-9pc, citing uncertainty in consumer, government and company spending on technology.

Wall Street had been expecting Q2 sales of US$15.8bn that would rise to US$16.2bn in the following three months.

However, it has reduced its outlook to say sales would most likely be in line with the second quarter at around US$15.6bn.

The outlook is a speed bump on a strategy of focusing on higher margin server, storage and consulting services that has so far been working for the company and allowing it to consistently beat expectations.

Holding steady on enterprise strategy

Indeed, strong gains in enterprise sales remain solid for Dell, with its large enterprise division reporting a 1pc increase in revenues to US$4.6bn and its SMB division recording revenues of US$3.7bn, up 5pc. Consumer revenues were US$2.9bn, up 1pc.

Michael Dell, chairman and chief executive officer, said: “We continue to see great momentum in the high-growth areas of our business, which is a direct reflection of the discipline and strong execution our global Dell team is applying to help solve real-world challenges for our customers.

“We’re creating efficiency across every step of the IT value chain and ultimately enabling all customers – from home users to large businesses and government organisations – to achieve the outcomes that matter most to them.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years