Dell Inc. on Thursday announced that second-quarter net income slumped 51 percent after it slashed prices to spur sales and said the Securities and Exchange Commission is investigating its financial reporting.
The Round Rock, Texas-based computer-maker posted earnings of $502 million, or 22 cents a share, down from $1.02 billion, or 41 cents a share, a year earlier. The latest results missed estimates by 10 cents a share. Sales rose 5 percent, to $14.1 billion, the slowest sales growth in more than four years.
Chief Executive Kevin Rollins blamed "aggressive pricing" in July when he cut the company's profit forecast. Dell was undercut by competitors on price, alienated customers with poor service and failed to offer PCs with faster, more efficient Advanced Micro chips.
Dell "has been criticized, and rightfully so, for their poor customer service, and so a lot of customers are going to have to experience how Dell handles this," said Daniel J. Renouard, an analyst at Robert W. Baird & Co. in Milwaukee. "If they come away feeling like Dell did a good job and they were treated well, then they might come back and buy Dell again."
