Dell pricing policy hits profits

Dell has plans to increase its market share in developing economies

Dell, the world's second largest PC maker, has said that a "strategic" effort to cut the prices of its computers has dented its earnings.

The firm made a profit of $616m (£336.8m) in the three months to 1 August, down 17% on the same period a year earlier.

It said restructuring costs, partly linked to job cuts as the firm looks to slim down, had also had an effect.

The profit slump was worse than many analysts had expected.

Earlier this week, Dell unveiled two new laptops which it said were designed for small businesses, governments and educational institutions in emerging economies.

Shop presence

Chief financial officer Brian Gladden said Dell made had made "strategic pricing" changes in Europe, the Middle East and Africa to speed up growth.

Dell built its reputation and profits on just-in-time production of computers ordered direct by customers rather than sold through stores.

However, it is adjusting that model - by getting its computers into more shops.

Mr Gladden said he hoped that its growing presence would boost demand from parents of students returning to school after summer holidays.

Sales in the period rose by 11% to $16.4bn - better than Wall Street's expectations.