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Dell Fails to Meet Expectations Admits PC Market Turmoil

Manufacturing giant Dell, alongside competitor HP, has been making efforts to find a workaround for the impact that Apple’s iPad and Android tablets, among other mobile devices, has had on the PC industry. About 70 to 75 percent of Dell’s business still comes from the PC market however, and this was presumably the primary reason behind its disappointing quarterly report.

Q4 net income sunk $764 million or 43 cents a share, an 18 percent decline from the $927 million, or 48 cents, the company reported for the same quarter a year ago. Sales rose 2 percent to $16 billion, meeting analysts’ expectations, but Dell’s consumer unit declined by just as much.

The biggest surprise was Dell’s lowered forecast for the next quarter. The hardware maker expects sales to drop by 7 percent to $14.9 billion, an estimate that drove its share down 7.3 percent to $16.89 in early trading.

Sluggish sales — coupled with shrinking profit last quarter — have raised concerns about Dell’s comeback plan, which has relied on streamlining operations to boost earnings. After an almost 25 percent gain in Dell’s shares this year before today, some investors may have been overly optimistic about the company’s ability to turn around its operations, said Brian Marshall, an analyst at ISI Group Inc. in San Francisco.

Dell has been taking several approaches to try and mitigate the downturn in worldwide PC sales. The company has carried out some internal changes, and has also begun investing more in its  increasingly profitable groups: enterprise, software and services. A few months ago it even cut off its long-standing partnership with EMC in order to focus more on its own storage products, rather than having to resell the latter’s.

HP also had some news in the storage space, the most recent being their Gen8 launch.

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