Dell's profits nosedive 72% in the face of sinking PC business

Laptops and software takes biggest hit

Dell PC

Dell's profits plunged 72% year-on-year to $204 million (£130 million) during its second fiscal quarter following a less than stellar performance from its troubled PC business.

Although sales of Dell's desktop and thin client PCs actually increased by 1%, it was offset by a 10% decline in laptop sales, and a 5% slide in revenue from third party software and peripherals.

Overall, the company saw sales of $14.5 billion for the quarter, flat from a year earlier but a penny above analysts' expectations.

Its Enterprise Solutions Group provided a shimmer of hope, increasing sales by 8% to $3.3 billion. It was helped by a 19% increase in sales from its networking business, a feat that could not be replicated by its storage unit, which saw sales slide 7%.

Dell's services business achieved a modest rise, with sales up by 2% to $2.1 billion. Sales from its software division totalled $310 million, resulting in an operating loss.

Prolongued slide

It was the seventh consecutive quarter of sliding profits for world's former top PC maker. Analyst house Gartner positioned Dell as the third top PC vendor in terms of global shipments during its most recent forecast, behind second placed HP, while Lenovo was at the top of the table.

The financial results arrived one day before a US court gears up to hear a testimony from activist investor Carl Icahn, who is embroiled in a tug of war over the company's future with its founder and CEO Michael Dell.