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Dell takes big profit hit: Mobile customers look elsewhere

Dell's profitably continues to suffer as the CEO tries to take the company private.

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Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
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Brooke Crothers
With a discount coupon, Dell's 15-inch touch screen Inspiron is selling for about $500. Dell is trying to compete on price in the face of increasingly inexpensive tablets. This is hurting profitability.
With a discount coupon, Dell's 15-inch touch screen Inspiron is selling for about $500. Dell is trying to compete on price in the face of increasingly inexpensive tablets. This is hurting profitability. Dell

Dell's net income for its fiscal second quarter nosedived as it struggled compete in a smartphone- and tablet-centric world.

Dell posted net income of $204 million in the quarter, down 72 percent from the same quarter a year ago. Revenue came to $14.5 billion, essentially flat from the same period last year. One of the few bright spots was that revenue beat Wall Street forecasts, which averaged about $14.18 billion, according to Thomson Reuters.

Mobility is not faring well, however. Though Dell did not conduct the traditional conference call with analysts, it did offer a presentation where it stated that mobility revenue was down 10 percent year-to-year to $3.6 billion.

Mobility "demand [is] pressured by customers diverting spending to alternative mobile solutions," the company said in one slide.

This echoes an SEC filing back in March when the company cited a "deteriorating outlook for the PC market as a result of, among other things, smartphones and tablets cannibalizing PC sales."

Desktop and thin client revenue was up slightly, by 1 percent, while revenue in software and peripherals was off 5 percent year-to-year, the company said.

Corporate enterprise computing, with revenue of $3.3 billion, was up 8 percent year-to-year.