Dell said its quarterly profits fell by 72 per cent over the last year as the struggling computer giant attempts to negotiate both a rapidly shrinking PC market and a takeover battle between founding CEO Michael Dell and investor Carl Icahn.
The firm said that its profits in the second quarter of 2013 had fallen to $204m (£130m), down from $732m (£470m) in the same period last year. This is the seventh consecutive decline in profits for Dell.
Once the world’s number one PC manufacturer, the migration of computer users from PCs to mobile devices has severely damaged Dell’s revenues, half of which still come from PC sales.
The company is currently attempting to shift its focus to enterprise services and software, and sales in this sector have risen 9 per cent to $5.8 billion. However, some analysts are still sceptical, believing that these changes have been made too late.
Founding CEO Michael Dell is currently attempting to take the company private, offering a $25 billion buyout at $13.75-a-share plus a 13-cent dividend. Opposition to this offer is being spearheaded by Carl Icahn, a billionaire ‘activist investor’.
Activist investors are fund managers who buy into companies in order to demand greater returns to shareholders or changes to how the business is operated.
Icahn, who holds an 8.7 per cent stake in Dell, is currently suing the company in an attempt to restrict Michael Dell’s voting powers in any shareholders conference. However, the continuing slump in profits may give credence to the CEO’s buyout offer.
If his bid is successful, it’s though that Michael Dell will attempt to transform the company into a provider of computing services like HP and IBM. Despite its recent struggles, Dell remains the world’s no. 3 PC manufacturer.