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May 23, 2012updated 23 Aug 2016 9:15am

Dell profits chopped by 33% due to success of iPad

Dell has admitted that its poor quarterly showing is due to sales of ‘alternative mobile computing devices’ – namely Apple’s domination with its iPad tablet computer.

By Allan Swann

Dell’s revenue was down 4% to $14.4bn for fiscal first quarter 2013 results, the company’s net income was $635m – down 33% year on year.

Dell has been hit hard in the Consumer division, which was down 12% to $3bn. Dell CFO Brian Gladden admitted that this was due to ‘alternative computing devices’, which has seen the notebook business shrink by 10%.

"The environment remains challenging. Consumer spending on desktops and notebooks continues to be under pressure, and much of the growth in consumer has migrated to entry-level products in emerging markets, where we’ve chosen not to participate," said Stephen Felice, Dell’s President, Consumer, Small and Medium Business in a conference call.

"We’re also seeing some IT spending prioritized to purchase other mobile devices. Now this is mostly a consumer dynamic, but there is clearly some impact in areas of commercial as well."

CEO Michael Dell told investors that the company is lining up its new products behind Windows 8, including a new tablet device.

"We’re totally lined up with Windows 8. You’ll see us introduce tablets contemporous (sic)with the Windows 8 launch," he said.

"Unlike other Windows transitions, this is a transition where you generally are going to need a new PC, whether it’s a tablet or an Ultrabook with touch or a notebook with touch or a PC with touch or some derivative hybrid of all of the above type of products. The product refresh cycle associated with this release of Windows is likely to be very different from other releases. But it’s hard to know exactly what that looks like. We’re preparing a full complement of products, and we’ll be ready with those, as we said earlier, at the time of the Windows 8 release."

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As CBR reported here, Dell has slipped to fifth position in mobile PC sales, behind key rivals such as HP, Lenovo and Acer. Apple remains on top.

HP will be reporting its results at the close of trading on Wall Street today.

Dell saw declines in its large enterprise division ($4.4 billion, down 3%) and its public division ($3.5bn, down 4%).

Its small and medium business revenue grew 4% to $3.5 billion, with enterprise solutions and services up 17%, led by services revenue growth of 23% and servers and networking of 16%.

The company expects to benefit from cheaper hard disk prices as suppliers recovered from last years Thai floods, but this may be offset by higher memory and display costs. The company expects second quarter revenue to be up 2-4 percent from this quarter – $14.7bn to $15bn – lower than expected.

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