Dell, one of the largest companies in the technology world, faces falling profits as an ongoing shareholder battle takes its toll on the company. The Texas-based PC giant reported first quarter profits of just $140 million on revenue of $15 billion, a two percent decrease from its average earnings for the quarter.
Many of Dell’s issues can be traced back to a product lineup that’s falling behind offerings from its competitors. Dell has continued to focus on home and business computing over the past decade, while its rivals – HP and Lenovo amongst them – have increasingly focused on mobile devices such as touchscreen tablets.
The company’s catalogue has resulted in an ongoing dispute between its founder Michael Dell and the company’s two largest investors. Mr. Dell wishes to take the company private once again and focus on developing mobile devices, while many shareholders argue that Dell should remain a public company.
A key point of dispute between Mr. Dell and the company’s two largest investors – Southeastern Asset Management and Carl Icahn – is over Dell’s value. Mr. Dell is bearish on Dell’s current valuation, offering to buy the company for $24.4 billion using his personal funds and the assistance of a private equity group.
Dell’s investors, however, claim that the company is worth far more than $24.4 billion, and that Mr. Dell’s offer is a ‘giveaway’. Dell’s revenue decreased by two percent in the last quarter, although income from new technology increased by 12 percent, making up for a nine percent drop in income from PC sales.
Whichever direction Dell chooses, the company faces a dilemma: to reduce its involvement in the home PC market and focus on mobile devices, or continue with its – in the past – most profitable enterprise and continue to manufacture home PCs and business workstations.
