HP and Dell see drastic dip in PC sales

The world’s two largest personal computer makers, Hewlett-Packard and Dell, said that a slowdown in sales to consumers in the first months of the year damped overall revenues.

“The PC market continues to be bifurcated,” Leo Apotheker, the HP chief executive, said in a conference call with analysts. He added that “even though our consumer PC expectations had been cautious, the steepness of our Q2 decline is greater than what we had anticipated.”

HP said sales of personal computers in the fiscal quarter ending April 30 fell 5 per cent, to $9.4 billion. A 23 per cent decline in consumer computer sales far outweighed a 13 per cent increase in sales to businesses.

Companies that make personal computers, like HP and Dell, are vulnerable to changes in consumer spending because of the fragile economy. But despite the tight wallets in a slowly recovering economy, shoppers have been eager to buy tablet computers, a market that HP will finally enter this summer with its planned release of the TouchPad, a rival to Apple’s dominant iPad.

Analysts attribute some of the weakness in consumer PC sales to the rise of tablets. Overall PC sales declined 1 per cent to 3 per cent during the first three months of the year, according to slightly different estimates by IDC and Gartner, two market research firms. But they also blamed the economy and a lack of innovation in PCs.

HP, based in Palo Alto, California, reported net income in the quarter rose 5 per cent to $2.3 billion, or $1.05 a share, from $2.2 billion, or 91 cents, in the year-ago quarter.

It said that overall revenue in the quarter climbed 3 per cent to $31.6 billion.

The adjusted income of $1.24 a share was slightly above the expectations of Wall Street analysts. They had expected $1.21 a share and revenue of $31.54 billion, according to a survey of analysts by Thomson Reuters.

Revenue during the current quarter is expected to be $31.1 billion to $31.3 billion, slightly below analyst forecasts of $31.8 billion. Adjusted income is expected to be around $1.08 a share, which was also below the $1.24 a share that had been predicted.

Full-year revenue is pegged at $129 billion to $130 billion with adjusted income of at least $5 a share, also below analyst predictions.

For Dell, sales of servers, computers and storage devices to businesses continued to help it offset weaknesses that have plagued its consumer business the last few years.

Brian Gladden, Dell’s chief financial officer, said consumer sales were even weaker than the company had expected during the quarter. But he added that the consumer market accounts for only 20 percent of Dell’s total revenue, “a dynamic that is really good for us.”

The company reported that in its first quarter, net income nearly tripled to $945 million, or 49 cents a share, from $341 million, or 17 cents a share. Revenue rose 1 per cent to $15 billion.

©2011 The New York
Times News Service