Dell to offer More Products with AMD Inside

Updated: Dell is set to broaden its relationship with chipmaker Advanced Micro Devices as it works to firm up its position in the PC market.

The Round Rock, Texas, PC maker on Aug. 17 said it would launch a line of Dimension consumer desktops containing AMDs Athlon processors in September and add two-processor AMD Opteron models to its PowerEdge server line before the end of the year.

The moves expand on a previously announced plan to offer multiprocessor Opteron servers, this year. But Dell the news for Dell was not all good.

After announcing on Aug. 14 a massive a recall of 4.1 million notebook battery packs, the company said on Aug. 17 that it facing a probe by the U.S. Securities Exchange Commission. The SEC requested information related to revenue recognition, for example, but has not accused Dell of any wrongdoing.

Dell executives downplayed the probe as an informal affair thats expected to be immaterial to its business to analysts and reporters. Instead, they focused on the companys road ahead.

After reporting quarterly earnings per share of 22 cents per share on revenue of $14.1 billion for its second fiscal quarter after the close of Wall Street on August 17—figures that matched its lowered expectations for the quarter—Dell says its working to balance its market share and profitability goals while facing down a series of its own missteps in customer service and pricing along with a slower-growing global PC market and stronger competitors in the likes Hewlett-Packard.

The market "is slowing, theres no debate on that one at all. I think the question is how you take share and do you keep up with the market growth rate. I think were going to hang in there and continue on that trajectory, despite what anyone else says," said Kevin Rollins, Dells CEO, in a conference call with reporters following the earnings statement.

Despite seeing market share gains in geographies such as Asia and what it says are customer service satisfaction improvements, "We are clearly disappointed with our financial results," Rollins said later in a conference call with analysts. "We can do better and we know that."

He said during the analyst call that Dell could have better managed its pricing versus profitability during the second quarter and thus left some profits on the table during the period, he said. Dell warned on July 21 that it would report lower than expected second quarter earnings due to aggressive PC pricing in the corporate space.

Dell, doesnt intend to relent on market share, however, Rollins said, meaning the company will continue to price its products aggressively.

Dells top executives believe that with new pricing methodologies, such as eliminating rebates for consumers and new sources of component price cuts in both processors and other areas such as memory will allow it to counterbalance aggressive prices thus continue its growth while also managing profitability. Improvements in service and support—one reason Dell recalled so many laptop batteries, Rollins said, was to show its dedication to customers—are also expected to help shore up Dells position, company executives believe.

Next Page: The formula for growth.