Dell which once led the world in the computer market now needs to cut down its prices in order to attract customers. The renowned computer manufacturing company is now nervous about its future as it is struggling to attract new customers. They in order to attract their target market keep on cutting their computer prices.
“It was predictably bad. It’s not a big surprise that margins compressed to the degree that they did, when they’re prioritizing sales volume over profitability,” Morningstar analyst Carr Lanphier said, via Reuters. “You have to offset that uncertainty somehow.”
The founder and owner of Dell Computers Michael Dell, in order to bitter contest over its future, proposed a $25 billion buyout to capture the private PC maker, but according to the shareholders the offer is too low for them.
In order to compete with the two big names in computing market Hewlett-Packard Co and IBM, Dell needs to cut its prices to win the trust of the customers, some analysts say. However, some are of the view that since 2008 Dell has spent about $13 billion in acquisition and if the company utilizes this amount into storage, software and networking, it can restructure the organization by using reverse direction and unload assets method.
“They can’t compete on a level playing field when you have a wrestling match over the future of the company,” Lanphier said.
As the technology advances and more people are attracted towards new and innovative technology of smartphone. This has hurt the PC market too. In recent years the sale of Dell has slid 5% to $9.1 billion.
In the second quarter of this year the net income of Dell fell sharply to $204 million or 12 cents a share, while the income was $732 million or 42 cents a share at the start of the year. The CFO of the company Brian Gladden has reassured its shareholders and clients that they in order to get the best possible results focus more on the transformation and betterment of the product.
“While the environment continues to be challenging, we remain focused and dedicated to this objective,” Gladden said.
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