SAN FRANCISCO (AP) — Dell Inc.'s financial performance deteriorated along with the rest of the personal computer industry in the third quarter as the company scrambled to expand into other technology fields to offset problems facing its main business.
The results announced Thursday reinforced fears that Dell could be stuck in a funk that may last several years. The reason: Dell, like long-time rival HP, gets much of its revenue from PCs, machines that have been losing their appeal as both consumers and corporate buyers become more enamored with less expensive smartphones and tablet computers. A feeble economy, especially in Europe and China, is posing additional challenges.
Although investors were braced for a dismal quarter, Dell's numbers were slightly worse than analysts expected. Management dampened spirits even further by offering a fiscal fourth-quarter forecast that raised the possibility of Dell's revenue falling by as much as 13 percent from the same time last year — even bigger than the decline suffered in the most recent quarter. That would mark the fourth consecutive quarter in which the magnitude of Dell's year-over-year revenue decline has widened.
The sobering outlook doused any lingering hopes that Dell might get a holiday sales lift from the release of Windows 8, a radical makeover of the Microsoft Corp. operating system that powers most PCs. In a conference call with analysts, Dell executives said they expected the PC market to remain lackluster, at best, for at least two more quarters.
ISI Group analyst Brian Marshall now thinks it will take Dell several years to bounce back. He made the prediction in a Thursday research note that declared Dell is "still between a rock and a hard place."
Dell's stock price slid by 15 cents to $9.41 in extended trading after the results and disappointing forecast came out. The shares have lost nearly half their value during the past nine months as it has become increasingly clear the company wasn't likely to quickly adapt to the growing demand for sleek, hand-held devices controlled by a few swipes of the finger.
In the latest quarter, revenue in Dell's mobility division fell by 9 percent from the same time last year, while desktop computer sales decreased by 8 percent.