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Dell Q3 already in ruin – analyst

Danger, Kevin Rollins!

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Dell's moves to lower prices, hire more understandable customer service reps and stop product fires do not appear to be helping its immediate fortunes.

Think Equity analyst Eric Ross warned today that channel checks in Asia show Dell's PC sales "declining rapidly below expectations". Dell will likely struggle to correct the sales slip before the end of its third quarter, according to the analyst, and now faces a "near-impossible" situation. The hardware maker may well need to issue yet another mid-quarter revenue warning - a process that's becoming a tradition in Round Rock.

Dell must continue to lower prices and eat into profits if it hopes to slow market share losses. "Competitors are driving gains based on price, and the Asian market is largely a price-driven market," Ross said.

Making matters worse, Dell could see Intel chop its co-marketing budget from hundreds of millions of dollars down to nothing, according to the analyst.

Intel could be reacting to Dell's recent adoption of AMD's server and desktop processors. Dell had been the only major hardware maker to resist AMD's call until buckling this summer.

Dell's management has been doing everything it can think of to try and revive the company's fortunes. Sadly for investors, "everything" doesn't include all that much. Dell has moved to cut prices, eliminate rebates and hire more customer service representatives, thinking this will restore its image as a decent, low-cost computer supplier.

In the meantime, exploding laptops and ongoing customer support horror stories undermine Dell's "we're better now" pitch. ®

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