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Dell in hot water for deceptive advertising

Posted May 28 2008, 02:34 PM by Kim Peterson
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Dell had better make headlines with its earnings call tomorrow, if for no other reason than to bury the news out about its misleading advertising practices. A New York judge came down hard on the company yesterday for baiting customers with financing promotions that it never intended to actually offer.

Dell offered freebies and no-interest financing to "well qualified" or "best qualified" customers, according to the judge. But most customers who took the bait were given interest rates from 16% to 30%. The judge also faulted Dell for shoddy customer service that included long telephone holds and denying rebate requests. The judgment had little impact on Dell shares, which are up 3 cents today to $21.52.

Dell said it disagreed with the judge's decision, but hadn't decided whether to appeal. I think an appeal is unlikely; why would the company revive such a damaging case? The question now is if other states will follow New York in suing the company. New York's attorney general has received 1,000 complaints against Dell, and I'm sure other states are hearing from customers as well. (New York customers can apply for restitution at www.nyagdell.com).

On to the earnings report. Dell is in turnaround mode after a miserable year in 2007, when profits tumbled and revenue barely grew. Key to the turnaround is a new strategy to place Dell products in more stores here and overseas. Although Dell still lets people custom-order a PC, it's focusing more on pre-made models that it ships to stores. Dell is making solid inroads in Asia, getting its computers into electronics chains like Suning and Gome in China.

Analysts are expecting Dell to report a Q1 profit of 33 cents per share and revenue of $15.66 billion. At this time last year, Dell reported profit of 34 cents per share and $14.6 billion in revenue.

Dell shares have been creeping up in the last three months, and Morgan Stanley recently upped Dell's rating to overweight with a $28 price target.   

Update: Dell's Q1 results are in, and it looks like the company beat expectations. Revenue hit $16.1 billion, and profit was 38 cents per share. A highlight of the quarter: Notebook computer sales were up 43% from the year before. 

Additional reading:

Dude, did Dell finally score?

Dell moves away from build-your-own PC

Dell is so over the shopping mall

Dell disappoints again

Dude, you're getting a dud

Comments

 

I just bought a new computer system, the whole nine yards, wanted a Dell, settled for HP, thankfully. A friend of mine does financial consulting for big business, said Dell was going down the tubes??

The HP is exceptional and less expensive than equal Dell, also really pay rebates.

Unfortunately, I did purchase a Dell and I am so unhappy that I cry every time someone says I will send you and email (which I read at home) or if I have to do work from home in word.  Dell's deceptive pracitices had be to believe that I wa purchasing the computer with the software and would be able to use it continuously, but that is not the case, after the computer crashed, I had to have it repaired and eventually I learned from Dell that the Microsoft Word software was temporary, oh and the sound card that I thought was in the computer had to be ordered, a whole different story.  Dell should shut it doors or better yet, we should get paid to get a Dell Computer from Dell.  They are worse than C-- oops, this is not their blog -- disappointment

I've bought many, many computers from Dell, and was always satisfied with their performance.  However, I also attempted to purchase two computers on the 0% interest offer, and was instead given a 19% interest rate.  This after I'd already purchased 4 previous Dell computers.  Don't know what makes up a "best customer" or even a "qualified customer," and when I called to complain, the woman "apologized for the inconvenience."  I informed her 19% interest isn't inconvenient, it's highway robbery.  I paid the balance off, to avoid paying such an interest rate, and I continue to purchase Dell computers.  I just remember that human nature being what it is, I have to be on my toes no matter who I buy from.

It's about time someone address's Dell's customer service (or lack there of).

I, nor any of my co-workers have ever had a satisfactory experience with a Dell representative.

Save yourself the headaches  - by a Mac.

My daughter was a victim of this practice. When she realized what was happening she demanded what the contract stipulated. She was kept on line for about 0ne hour with intermittent conversations andwas finally told that she can return the computer and repurchase it to correct the 'error'. At this point she lost it. The 'error' was corrected.

The same thing happened to me 2 years ago.  I had excellent credit when ordering my computer from dell.  They told me I would get no interest financing for 6 months.  When my first statement came in, there were rediculously high finance charges.  When I called (and they do have horrible customer service), they told me I didn't qualify for the no interest, even though they told me over the phone I did.  I had to transfer my balance to a different credit card.  Dell is a deceiving company, and will get what's coming to them.  To anyone looking to buy a new computer, STAY AWAY FROM DELL OR YOU'LL REGRET IT!!!!!

This company is very trying on the patience, I got sucked in and bought a dell and have had no support whatsoever from them, when I finally do get through to their support line after hours of waiting, I get a person who you absolutely cannot understand as the accent is too thick.  I don't mean to say anything about people with foreign accents but probably the place to work is not on the phone, I have given up trying to understand what anyone is saying, and if you ask them to repeat themselves over and over, they get rude, well, sorry but I cannot understand why a person who cannot speak english is waiting on customers on the phone???????  But its mostly my fault for getting sucked in!

I agree about Dell's consumer-side business.  However, all my interactions with Dell on the Mid-Market Business sector of their business have been no less than stellar.  The sales team assigned to my company is always on the ball on everything I send them, and ships my orders out expediently (and competes quite favorably on price).

Consumer-side, I've only had one experience with them personally.  My 6-year-old refurbished laptop (granted, that's business-grade, too... a Latitude D800) has been seriously durable, however, it seems to have been made before Dell started cutting costs by going with lower-quality manufacturing processes.  The one support call I made was for a DOA power adapter.  It took me 2 hours on the phone with India for them to verify it was dead and send me a replacement (shipping was quick, however).  That was not so great... :-/

I'd just say that it's important to look at more aspects of a company than just it's consumer-side business.  I'm fairly certain that Dell's business segment makes up a larger percentage of its business than the consumer segment (I could be thinking of past data, though).

I purchase a Dell in June of 2007 my warranty runs out in 2010. However, I have been on the phone with customer service (INDIA) for hours. One day it was 10 hours. They tried to fix over the phone but could not. They DO NOT want to send tech out to your home but after much pledeing and begging finally they sent one out replaced the photo card. Computer still did not work and kept getting same error message had to pay Geek Squad still not fixed. Finally after computer would not even turn on after 5 days Dell sent out another tech who replace the motherboard and the power strip but did not replace the memory card as they were to do.  They have the worst customer service partly due to communication problems and the fact that they promise to see out tech but you have to beg and beg to get one to come out.

It's Dell fault we are in this Mortgage crisis! 16% to 30% interest rates, no mortgage broker ever did that!

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