Dell warns 1Q earnings will miss mark; shares tumble

“Amid stiffening competition, computer maker Dell Inc. said Monday its fiscal first-quarter results will miss earnings targets, blaming the shortfall on ‘pricing decisions.’ The news sent Dell shares falling nearly 6 percent to a 52-week low,” May Wong reports for The Associated Press. “The Round Rock, Texas-based company said it expects to earn 33 cents per share on revenue of about $14.2 billion, compared with analysts’ average estimate of 38 cents per share on revenue of $14.52 billion.”

“During the quarter, Dell aggressively discounted some of its products as it lost ground to rivals. In a statement, Dell CEO Kevin Rollins said the company had been ‘making investments in our support infrastructure and product quality’ and slashing prices. Company officials declined to comment further. Dell will report first-quarter earnings on May 18,” Wong reports. “Stamford, Conn.-based market researcher Gartner Inc. said Dell saw its share of industry computer shipments decline to 16.5 percent in the first quarter of 2006 from 16.9 percent a year ago.”

Full article here.

[Thanks to MacDailyNews Reader “LinuxGuy” for the heads up.]

MacDailyNews Take: Gee, isn’t that just too bad?

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  1. oddly, since Dell was up nearly 3% today, this translates into just an $0.83 decline in share price. Hardly teh “punishment” Wallstreet would no-doubt dole out to AAPL should the iPod sell 9.1M instead of 9.2M units in a quarter.

  2. macromancer –

    In this case, no, Apple won’t be moving forward in the market cap war because today Apple went from 72.90 to 71.55. they actually did WORSE in the market today compared to Dell, though Dell missed projections and Apple won the Beatles lawsuit.

    I hate the illogical market.

  3. rasterbator –

    Dell is “prime” for a hostile takeover? excuse me? based upon _what_??

    In the history of history, I can’t think of any situation where the marekt _leader_ was taken over by another company. It doesn’t happen because to leverage a hostile takover you need lots of equity and cash on hand.

    Unless Microsoft decided they wanted to own the end-to-end solution, I don’t believe there are any other tech companies with enough cash to buy Dell.

    Dropping a few percent in a day doesn’t discount the stock. The company is STILL the number one computer vendor with long term service contracts and direct sales to the world’s largest companies.

    In short, Dell isn’t going anywhere.

  4. It must really burn Mike Dell’s biscuits to know that he has no control or influence over the development and direction of Windows. How many times a month does Dell call Bill Gates and ask, “Damn it, Bill, is it ready yet? You’re killing me here. Hello? Hello? What the…”

  5. Dull is selling home computer systems here in the Uk for approx. USD 235 what kind of crap are you going to get for that? But, hey, the customer support is going to be great. BTW microsoft is still running ads on TV about how great their security is . . . . WTF!!

  6. Dell blaming the shortfall on ‘pricing decisions.’

    You mean less isn’t always more?

    You mean they can’t just keep lowering the price to compete, then lowering it some more, and then if that doesn’t work, lower it again? You mean it’s hard to continue to be profitable playing the low end all the time? I’m shocked, shocked I say!

    Soon the tide will be turning with Wal-Mart too. And then eventually, when American consumers (and businesses) stop equating “Lowest Price” with “Best Purchasing Decision” every single time…

    THEN we can finally start competing with China. And stop having all of our clothing, toys, electronics, and collectibles (and whatever else) made there by slave labor.

    Maybe it will happen before China owns every U.S. Dollar of debt there is. Once they own that, they own us.

    MW: thinking.. as in this post started me thinking! How do it know?

  7. me:

    That’s an interesting idea. What if Microsoft wanted to imitate Apple’s vertical market strategy and buy Dell Inc. How would other PC manufacturers respond? How would the federal government react? What would Mike Dell say at the press conference? Would Mike Dell buy Krispy Kremes for Steve Ballmer or would Steve Ballmer deliver Starbucks to Mike Dell? Will we ever know?

  8. What is happening to Dell happened to Compaq a few years ago. Both cut prices to gain marketshare and compromised on quality to eek a profit.

    Looks like now Dell is beginning to hurt as people turn away from the company. Fact is this business model will work for a while until some other company beats you at your own game.

    I predicted this would happen.

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