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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

May 15, 2006 at 4:02 PM

Dell’s mea culpa

SAN DIEGO — A week after Dell warned that it will miss its earnings forecast, shocking Wall Street, Chairman Michael Dell offered some insight into the situation.

“We kind of underestimated what was going to happen competitively,” Dell said at FiRe during an interview with Mark Anderson.

When the company announced on May 8 that it wouild miss its forecast, netting 33 cents per share in the first quarter instead of the forecasted 36 to 38 cents, it attributed the miss to “pricing decisions.” Apparently that meant the company didn’t expect other PC companies to be able to lower prices and take sales from Dell.

“We used to be about three times more profitable than our competitors,” Dell said. “Now we’re about two and a half times more profitable than our competitors. We kind of underestimated how fast some of them were moving.”

In response, Dell has “kind of changed our approach,” he said. The company is “really focusing just on fundamentals — great products, great service.”

Pressed on whether the company can maintain its business model, Dell stuck to his lines: “There are lots of opportunities for us to do quite a bit better than we did last year. Some of the competitors did better. We didn’t recognize how competitive the market was going to be.”

Comments | Topics: Dell

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