Dell missed Wall Street's earnings expectations last week, according to the latest column in InfoWorld. And that's just the start of the warning signals. The report says the company that used to be known for its perfection is having trouble putting one foot in front of the other. While Dell has been making adjustments to jumpstart its earnings, the latest report shows a gross margin miss. Dell reported an 18.5 percent margin miss vs. the expected 19.1 percent, according to ATR analyst Shaw Wu. "We find this odd as (Apple) and HP experienced the opposite and our own supply chain checks indicate otherwise. Moreover, Dell's (average selling prices) were flat to up, indicating pricing pressure wasn't a big issue," he wrote in a note to his clients. So what's the reason? "Poor procurement execution." "It is interesting to note that Dell's costs may actually now be higher than HP and Apple, something that was unthinkable not that long ago," Wu said.
That's not Dell's only problem. The company had a huge battery recall not too long ago. There was evidence of deterioration in quality control and customer service. These are big headaches for a company that had been on top a few short years ago. Last Friday, the day after the results were announced, shares of Dell were off nearly 13 percent. And it's a lesson for every tech company. Customers have no tolerance for inadequacies. They will simply go somewhere else.
For more on Dell's stock roller coaster:
- See this Infoworld article [1]
Links:
[1] http://weblog.infoworld.com/tech-bottom-line/archives/2007/11/dell_techstocks.html