Dell's Latest Earnings Rattle Tech Sector

Dell missed its latest earnings projections for the quarter ending Aug. 1, although sales actually grew 11 percent. The results rattled the tech sector, but there seems little for the channel to be concerned about in the vendor's latest numbers.

If anythibng, Dell's expanded channel and retail strategy likely will benefit it during the upcoming quarter in the U.S., as the company targets back-to-school and holiday consumer and small-business market sales. Dell's difficulty in the last quarter seemed to center primarily on the international market, where it made "strategic pricing changes" to capture market share. That led to disappointing profiits; earnings dropped 17 percent from one year ago.

It's important to remember that most hardware vendors (including Dell) are reporting tat sales are growing. Maintaining margins is where the challenge lies. "Strategic pricing" carries a risk, and it seems the gamble didn't pay off for Dell this time. Channel partners are always in the forefront of pushing for stable pricing nd margins. As global economies, especially in Europe, start to weaken, perhaps vendors would be wise to heed the channel's call for price and margin stability. That approach avoids the tumult Dell has created.

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