Beleaguered Dell misses Wall Street expectations

Dell’s “latest financial results show that the company still has a long way to go to restore its once golden image on Wall Street,” The Associated Press reports.

“Dell, the world’s No. 2 PC maker, promises an aggressive cost-cutting campaign — that means more layoffs on top of the 3,200 jobs already eliminated in the past year — to boost profits,” AP reports. “And it is counting on growth in emerging markets to offset softness in the United States, where customers such as financial-services firms are reining in spending on technology.”

“The company said Thursday that its fourth-quarter profit dropped 6.4 percent, to $679 million or 31 cents per share, in the quarter ended Feb. 1. That included several one-time expenses totaling 7 cents per share and gains of 4 cents per share. Analysts surveyed by Thomson Financial had predicted a profit of 36 cents per share. A year ago, Round Rock, Texas-based Dell earned $726 million, or 32 cents per share,” AP reports. “Sales rose 10.5 percent to $15.99 billion, but that was below the $16.27 billion that analysts had expected.”

MacDailyNews Take: $15.99 billion in revenue is an awful lot of effort to generate just $679 million in profit. By comparison, last quarter Apple generated profit of $1.58 billion on revenue of $9.6 billion (See: Apple beats Street; reports best quarterly revenue and earnings in company history – January 22, 2008). To put it plainly, Dell’s margins suck.

AP continues, “Shaw Wu, an analyst with American Technology Research, said it was “disappointing” that Dell shipped 19 percent more units but still missed Wall Street’s targets for sales and profits. He concluded that Dell “sold a lot of low-end stuff” and cut prices in the face of tough competition. ‘The store shelves are fairly crowded,’ Wu said. Hewlett-Packard Co. and Apple Inc. ‘are doing very well globally. Those are two really tough guys to compete with.'”

Full article here.

MacDailyNews Take: Hey, we just thought of something that Michael Dell could do to fix this mess quickly: Shut it down and give the money back to the shareholders.

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