Wednesday, May 23, 2012

Dell (Nasdaq: DELL) shares fall on disappointing results

Dell (Nasdaq: DELL) shares fall on disappointing resultsPalm Beach, FL 5/23/12 (StreetBeat) -- Shares of Dell Inc. (Nasdaq: DELL) tumbled late Tuesday after the computer maker posted quarterly results that fell below expectations, with the company’s chief financial officer pointing to challenges in its business.

Dell (Nasdaq: DELL -16.84%) was down more than 12% after hours.

The company reported a fiscal first-quarter profit of $635 million, or 36 cents a share, compared with a profit of $945 million or 49 cents a share for the year-earlier period.

Revenue was $14.4 billion, down from $15 billion. Adjusted profit was 43 cents a share.

Analysts were expecting the Round Rock, Texas-based Dell to report a profit of 46 cents a share on revenue of $14.9 billion, based on a consensus survey by FactSet Research.

For the current quarter, Dell said it expects revenue to rise sequentially by 2% to 4%, which translates to a range of $14.7 billion to $15 billion.

Analysts were expecting sales of $15.4 billion, according to data from FactSet Research.

The company’s weak outlook appeared to have an impact on shares of rival Hewlett-Packard Co. (NYSE: HPQ -4.58%), which reports results on Wednesday. H-P’s stock was down more than 2% at last check.

Brian Gladden, the chief financial officer, said Dell had a “mixed quarter,” noting gains in the data storage, networking and services businesses.
However, he added: “The consumer business has become a bit more challenging.”

Gladden also pointed to changes in the consumer market, particularly the shift from laptops to smartphones and tablets. “Consumers today have other options in terms of alternative mobile devices.”

Analysts have noted how the rise of mobile devices hurts PC sales. Dell, for its part, has been pushing harder to expand its presence in higher-margin segments of the tech industry geared to corporate customers. But the company also has been buffeted by macroeconomic issues, including the crisis in Europe and weaker public-sector spending.

“Nasty” was how ISI analyst Brian Marshall described Dell’s results, adding that “I am sure they will have to lower expectations.”

Sterne Agee analyst Shaw Wu said the company had a “disappointing quarter despite low expectations. … It looks like the turnaround efforts the company is making is taking longer than expected.”

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