Dell turns down low-end PC biz, misses Q3 estimates

PC maker gives up billions in "low-end" PC business to bolster its margins following pressure from Hewlett-Packard but still misses revenue targets, report notes.

Dell missed third-quarter revenue estimates after walking away from US$2 billion in potential PC sales to focus on more profitable business opportunities.

In a Thursday report by Bloomberg, the PC maker gave up billions on "low-value" PC opportunities in a bid to preserve margins, according to Dell's vice chairman Jeff Clarke. This contributed to its third-quarter revenue declining to US$15.37 billion, from US$15.39 billion a year earlier. Analysts had earlier projected US$15.7 billion for the company, the report stated.

While the Texas-based company beat profit estimates for the third quarter, it told investors to expect slower sales growth for the rest of the year.

This is because Dell is having to cope with a hard-drive shortage triggered by flooding in Thailand, and also faces price competition with PC market leader Hewlett-Packard (HP), the report noted. As a result, it is increasingly opting to sidestep the low-end PC market in favor of servers, services and networking equipment.

"They walked away from unprofitable business. It sounds like HP got really aggressive on pricing," Jayson Noland, an analyst from Robert W Baird, told Bloomberg.