Shares of Dell were trading lower on Wednesday after the company provided a bleak view for PC demand, stoking fears that the company’s software and networking business won’t grow fast enough to deliver a turnaround. The company reported its Q2 profit fell by 18% while revenue fell by 7.5% on a decline in desktop and notebook sales. Revenue from the server and networking segment grew by 14%, delivering strong margins and helping results beat expectations.
However, investors were more focused on management’s outlook. The company said revenue would continue to decline in the current quarter and management cut its full-year earnings forecast to “at least” $1.70 per share, a big drop off from prior guidance of at least $2.13 per share.
CFO Brian Gladden said, “The revenue deterioration we saw in the quarter was clearly above anything we expected.” He also said that Dell’s core business of PC sales will face challenges for the balance of the year as it waits for the launch of Windows 8, which may help stabilize the PC market.
Dell (DELL : NASDAQ : US$11.68), Net Change: -0.66, % Change: -5.35%, Volume: 65,832,833