Friday, 29 August 2008

Is Dell the Canary in The Coal Mine for Tech?

Whilst many sectors of the US economy are either in outright recession or are experiencing a slowdown, the technology sector has for the most part remined unscathed. Yesterday courtesy of Dell we saw some signs that growth in technology is slowing, not just in the US but abroad. From Bloomberg:

Dell Drops on Signals of Europe, Asia Spending Slump

Dell Inc., the world's second-biggest personal-computer maker, fell as much as 12 percent in European trading after saying the U.S. slump in technology spending has moved abroad.

If the drop holds in the in U.S., it will be the biggest in nine months. Dell said yesterday that ``continued conservatism'' from some customers in the U.S. is spreading to Western Europe and some Asian countries.

Sales growth in those areas slowed last quarter, and profit missed analysts' projections after Dell reduced prices, particularly in Europe, cutting into profit margins. Chief Executive Officer Michael Dell has sought to shrink the gap with Hewlett-Packard Co., the leader in global PC shipments, by spending more to form retail partnerships around the world...

...Second-quarter net income fell 17 percent to $616 million, or 31 cents a share, from $746 million, or 33 cents, a year earlier, Dell said in a statement yesterday. Sales for the period ended Aug. 1 advanced 11 percent to $16.4 billion. Excluding costs for job cuts and other items, profit was 33 cents, short of the 36-cent average projection compiled by Bloomberg.