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August 16, 2013

Dell Revenue Slips 72 Percent After Company Cuts PC Prices

PC maker Dell reported a 72 percent decline in profits for its second quarter late Thursday afternoon after slashing prices on PCs and server systems to breathe some new life into sales and, hopefully, pick up some new customers.

Although Dell surpassed Wall Street’s modest estimates of $14.18 billion in revenue — the company posted revenue of $14.5 billion and a net income of $204 million — the company could well continue to experience a dwindling bank balance if it does not begin to offer up popular products and services such as Smartphones, tablets and cloud storage.

With the company focused on the takeover war that has erupted between the company founder Michael Dell and activist investor Carl Icahn, it is unlikely the firm will be focusing on the future until after investors cast their vote on Michael Dell’s revised buyout proposal Sept. 12.

Dell headquarters

Dell headquarters

Dell chief financial officer Brian Gladden seemed to confirm as much in a company statement.

“In a challenging environment, we remain committed to our strategy and our customers, and we’re encouraged by increasing customer interest in our end-to-end solutions offerings and continued growth in our Enterprise Solutions, Services and Software businesses,” Dell chief financial officer Brian Gladden said in a press release.

Michael Dell and partner Silver Lake recently agreed to dole out $13.75 — rather than the $13.65 proposed earlier this year — in cash for each share of Dell common stock held.  The extra 10 cents per share means the original $24.4-billion proposal to take Dell private has gone up by about $150 million. The new offer comes with a requirement: the company board must change the provision that shares that are not voted count as votes against the merger.

Dell, in a recent letter to the board, called the practice “unfair” and requested that a majority of votes be enough to push the deal through.

Icahn and partner Southeastern Asset Management are still hoping to acquire 72 percent of Dell’s outstanding shares and have promised to pay investors a special dividend.