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Speaking of Big Cap Tech Disasters: Dell

Friday, July 21, 2006 | 10:28 AM

in Corporate Management | Earnings | Technology

This morning, Dell preannounced ahead of their August 17th earnings. 2Q revenue will be ~$14 billion, with earnings 21 - 23 cents. The revenue is a little shy of estimates of $14.23 billion;

The real disaster was the earnings shortfall: 21 - 23 cents is way below analyst consensus of 32 cents. The stock was off as much as 15% this morning, breaking $20, trading as low as $19.05 (its 19.22 as I type this).

While I have been a critic of Dell of some time now, let me give them a little credit. Their new "Purely You / Build to order" commercial is probably the best marketing thing they have done in a while -- much better than the idiotic Dell Dude.

If Dell wants to play in the consumer space, they must understand that people do not have an IT department at home. A friend once called Windows 95 the IT Department Full Employment Act; Dells were purchased cheaply by corporate CIO's with a full staff to handle the inevitable issues. SOHO owners don't have that luxury.

I never got the sense from Dell that they truly grokked the Small Office / Home Owner, and the family student home purchaser.

My advice for them: Do not look to customer service for incremental cost cutting; they need to restore their prior, late 90s, full-on level of customer service for which they were justly famous.

UPDATE: July 21, 2006 11:45am

A commenter in the prior Microsoft discussion partially blames Redmond for Dell's issues: Their screwup in not getting Vista to market on time is hurting the entire PC sector.

Interesting thought . . .