Introduction to Dell Case

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"They have been suffering from a corporate market slump, and the usual bag of tricks--leveraging the supply chain and their economies of scale--haven't worked." Richard Shim, Analyst, IDC
"The old Dell was phenomenal at balancing growth and profitability. The new Dell appears to be still having to struggle" Rob Cihra, Analyst, Caris & Co.
"Businesses are spending with a lot more conviction at this point in the year than they were at this point in time last year, We feel like we've been chasing demand, and we're feeling like we are starting to get out in front."

Michael Dell, CEO, Dell Inc.

On February 18th 2010, Dell’s profit dropped to 4.8% in its fiscal fourth quarter even as a surge in holiday computer demand lifted revenue 11% from a year earlier. The decline can be traced to the steep discounts that Dell is offering customers in a mad race for acquiring market share. In particular, Dell's consumer division—which accounts for about a quarter of the company's revenue—saw sales increase by 11% from a year ago to $3.5 billion, but its profit dropped more than 80% to $9 million. The profit decline was partly due to the acquisition of computer-services firm Perot Systems, which closed during the quarter. But excluding deal expenses profit still fell 2% from the year before. (Refer to exhibit-1 for Dell’s quarterly profits in millions form 2008-2010) The slide in profit is the latest setback for Mr. Dell in his attempt to turn around the struggling PC maker. Dell, which had been the world's largest PC maker by unit sales, now ranks No. 2, behind Hewlett-Packard Co. and keeps swapping its position with Taiwan's Acer Inc. Both thses companies In recent quarters, Dell's PC-sales growth has lagged behind its rivals' rates, as they have been able to better take advantage of demand from consumers. Dell's unit shipments in its latest quarter rose 16% from a year earlier, compared with a 26% jump for H-P in the same period,...
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