Dell: Demand is worse than we thought; Ingram Micro agrees; Best Buy misses

Dell: Demand is worse than we thought; Ingram Micro agrees; Best Buy misses

Summary: Technology demand appears to be softening at a rapid clip. Dell said Tuesday that it is seeing "further softening in global end-user demand in the current quarter.

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TOPICS: Dell, Banking
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Technology demand appears to be softening at a rapid clip. Dell said Tuesday that it is seeing "further softening in global end-user demand in the current quarter." Here's why that's worrisome: Dell had a more positive outlook on Aug. 28, or a little more than two weeks ago.

Dell said in a statement that demand is slowing in Western Europe and several Asian countries. That's not all that surprising given how the economies are shaping up over there. For its part, Dell said it'll focus on its usual checklist: Consumers, enterprise, notebooks and emerging markets. IT also will continue to cut costs.

Ingram Micro echoed what Dell said. Ingram Micro, a massive technology distributor, cut its revenue and earnings target for its third quarter. Revenue is expected to be between $8.3 billion to $8.6 billion with earnings between $30 million to $39 million, or 18 cents a share to 23 cents a share. Wall Street was expecting earnings of 37 cents a share.

In a statement Ingram Micro CEO Gregory Spierkel summed it up:

"Earlier this month, we disclosed that softer economies created more competitive environments in July and August. It's now clear that this economic softness is continuing into September, which is exerting greater pressure on operating margins. In Europe, we are not seeing the typical September bounce- back from the summer holidays. North America seemed to be relatively stable in the summer months, but we're experiencing broad-based softness in September."

And just to hammer home the bad news all at once. Best Buy missed Wall Street estimates with earnings of $202 million, or 48 cents a share, on revenue of $9.8 billion. Wall Street was expecting earnings of 57 cents a share.

Earnings were whacked by Best Buy's "international expansion, investing in both people and technology to expand its presence in China and prepare for its first stores in Mexico and Turkey," according to a statement. Best Buy did maintain its outlook for the year, but investors weren't in the mood to believe management.

That's not terribly surprising given what Dell and Ingram Micro are saying. It's quite possible that Best Buy is ramping up just as demand is slowing abroad as well as in the U.S.

Despite those worries Best Buy has plenty of positive areas: Same store sales were up 4.2 percent, online revenue grew 32 percent and the retailer has an open field to run in relative to its competition. Best Buy CEO Brad Anderson acknowledged that the retailer has "some work to do in terms of managing our expenses amid a challenging macro economic environment."

Topics: Dell, Banking

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17 comments
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  • Demand problems due to Vista?

    The economy is clearly slowing, but I wonder how
    much of the reduction for computer sales is due to
    the poor performance of the Vista operating system.
    I, for one, will not buy a computer with Vista on it
    and am switching to Macs. I am not a Mac fan, but
    Vista just stinks on my machines.
    gertruded
    • Perception more than reality

      The perception of Vista is far worse than the reality. I've been using Vista since its release, and it may have had a rocky start at the beginning, but today the issues have been fixed and there's nothing wrong with it.
      CobraA1
      • Sometime Reality Creates Perception

        Vista deserves it's bad reputation. I tried it, and found it so slow that I went back to Windows XP. My mother in law and her husband purchased a computer with Vista installed. The computer keeps crashing, and they have to keep reinstalling. They are totally disgusted with Vista. Microsoft needs to do better.
        chessmen
        • Sometimes reality changes faster than perception.

          Perhaps it did deserve its reputation at one time, but much has changed since then, and it should not be having troubles anymore if it has all of the current updates.

          I would advise your mother in law to check for updated drivers for the hardware and updates for the OS.
          CobraA1
    • Demand problems. Did you read the article?

      It's the economy, stupid.
      Gruffydd
      • Exactly...

        With the price of gas still more than a buck higher than it was a year ago, the price of other stuff - food, clothing, etc... - also going up to cover delivery cost increases, the credit crunch, the housing market crash, etc..., it's NO wonder people don't have spare cash or credit to buy shiny new computer gear.
        Wolfie2K3
    • Yes

      Vista has crushed the economy.

      But don't worry, Apple will save the day.

      You should run for president. You definitely have the credentials of oversimplifying problems with irrelevant explanations. Go fight those evil doers in the Axis of Evil!
      tikigawd
    • XP over Vista

      For me, the end of life of XP pushed my purchase earlier than originally intended by about 6 months. At the time the horror stories I was hearing from multiple MS partners in supporting their clients convinced me to avoid Vista. Whether the problems have now been resolved is immaterial to me: I have a stable system with great performance, reasonable security, and thus have no reason to change for another couple of years.
      cynic8
  • yep, XP goes off the market -- no demand for Vista

    Microsoft took XP off the market this summer. Bring it back and I bet demand increases again!
    ChazzMatt
    • XP verses VISTA

      I could not agree more with this statement, I run both XP-Pro,SP3 and Vista,SP1 and if XP was brough back to the market place I feel certain MS share would increase. I always rely on XP, with a run on Vista perhasp once a week, most to make sure it is still there.
      ve1alq
      • Vista perhasp once a week

        That's exactly what I do.....give it a kick to make sure it's still alive :-)
        rocketman67
  • RE: Dell: Demand is worse than we thought; Ingram Micro agrees; Best Buy mi

    Always personal attacks from Microsoft people to
    deflect any critical comments. Shows the same lack
    respect of others that Microsoft has for its
    customers.
    gertruded
    • They reap what they sow... (nt)

      -
      hasta la Vista, bah-bie
  • RE: Dell: Demand is worse than we thought; Ingram Micro agrees; Best Buy misses

    I agree. I was going to buy a laptop for my wife but needed Windows XP due to University limitations. They said they could not do the machine I wanted without Vista so . . . . . . . NO SALE. shame really.
    patrick.a.harris
  • Vista the problem is narrow minded thinking

    Vista can hardly be considered the cause for the slowing of
    the tech retail sector. Not with the all the other financial
    problems accruing. I am not sure its very smart to go back
    to a older and less secure operating system such as XP.
    Many of the statements about Vista being slow are not accurate.
    I think much of the perceived slowness of Vista can be
    related to the graphic effects that occur when closing
    windows for example. I myself have found no reason to
    even remotely consider moving back to XP.
    In regards to the slowing retail sector. The computer has
    slowed because people have computers that work. Their is
    no real reason to spend money on a replacement when
    their computer is still working. Even business has put on
    hold the purchase of new technology for many reasons.
    jscott418-22447200638980614791982928182376
    • Burn me once...

      ...shame on you..

      Burn me twice...

      ...shame on me...
      hasta la Vista, bah-bie
  • Why bash Vista?

    If you don't like Vista, don't complain about it -- it's not at all difficult to wipe the drive and install XP. Or Linux, Ubuntu, whatever your favorite flavor happens to be.
    Murfski-19971052791951115876031193613182