Beleaguered Dell’s earnings drop 33%

“Dell reported a 33 percent drop in fourth-quarter profits that were slightly ahead of expectations. But the No. 2 PC maker’s sales figures came in below estimates and Dell warned that growth and profit margins will remain ‘under pressure’ for the next few quarters,” CNNMoney reports.

CNNMoney reports, “Dell said its sales for the quarter were $14.4 billion, a 5.1 percent decrease from the year-ago period. Analysts had expected revenues of $14.88 billion. Dell reported earnings of $673 million, or 30 cents per share for the quarter, compared to analyst expectations of 29 cents per share. In the fourth quarter of 2005, the company earned $1 billion, or 43 cents per share. Analysts had expected profits of 32 cents per share for the quarter before Dell issued a warning on January 31.”

“Dell’s stock has tumbled over 40 percent over the past two years on decreased sales, slimmer profit margins and the accounting probe… Dell did not offer specific guidance, but said that it expects growth and margins to be under pressure for the next several quarters as it transforms the company,” CNNMoney reports.

“‘We are disappointed with the company’s results, but what matters is our future plan of action. We are systematically moving to increase efficiencies, improve execution and transform the company,’ said Michael Dell in a statement. ‘Our business model will become more aligned with the needs of our customers,”‘ he added,” CNNMoney reports.

Full article here.

“Among Dell’s main business areas, desktop PCs remained the company’s biggest revenue generator, accounting for $4.6 billion, or 32% of the quarter’s sales. However, desktop revenue fell 18% from last year’s $5.6 billion,” Rex Crum reports for MarketWatch.

Crum reports, “Mobility sales, which include notebook PCs, was flat with a year ago at $3.8 billion. ‘Those results were pretty weak,’ according to Shaw Wu, an analyst with American Technology Research. ‘That area is one of the most important in the PC market right now.'”

“Additionally, Dell announced that it had received a stay from the Nasdaq Listing and Hearing Review Council, regarding any further action to delist the company’s stock from the Nasdaq. Dell has until May 4 to provide the council with any additional material for it to consider,” Crum reports. “Shares of Dell fell almost 2% in after-hours trading to $22.62.”

Full article here.

MacDailyNews Take: Box assembler Michael Dell’s best future plan of action to transform his floundering, unexceptional, run-of-the-mill company would be to… drum roll, please… shut it down and give the money back to the shareholders.

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42 Comments

  1. jscan:
    “I wish my own company could be “unexceptional” and still earn $674 Million in the 4th Quarter!”

    You don’t if your company had previously made even more than that, and the 674 million was a downward sliding figure with much more bad news on the horizon, was in a position of losing marketshare, with serious management issues, accounting irregularities (combined with possible stock options fraud), and a market position whose future was bleak.

    Sure the 674 million is a massive number, but Dell’s on the way down, and it doesn’t look like there’s much of a light at the end of the tunnel. The founder is back but without any great vision or ideas that could turn his flailing company around.

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