Dell sacrifices profits for market share

Company has been cutting prices to gain market share from HP

Dell has expanded market share in all areas

Dell shares fell 10 per cent in after-hours trading yesterday as the hardware manufacturer posted a 17 per cent fall in its fiscal second-quarter net income from $746m (£408m) to $616m.

The company has been aggressively cutting prices to gain market share from rival HP, sacrificing profitability but seeing revenue jump 11 per cent from $14.7bn to $16.4bn in the same quarter.

Gross profit margin in the period fell to 17.2 per cent from 19.9 per cent a year earlier.

"Our growth at a multiple of the industry across all major product categories for the second consecutive quarter affirms we are on track with our five key business priorities – notebooks, consumer, enterprise, SMB and emerging countries," said chief executive Michael Dell.

Earlier this year the company launched a new line of business laptops, including its first ultra-light notebook computers, and a range of lower-price models aimed at the market in developing countries.

The company has reduced headcount by 8,500 people in the past year as part of an efficiency drive. It aims to reduce its headcount by another 400 staff in the third quarter.