DOW JONES NEWSWIRES
Dell Inc.'s (DELL) fiscal second-quarter profit jumped 63% as
the computer maker reported wider margins and strong enterprise
demand for servers and services, while also notching growth from
consumer and small- and medium-size business customers.
Shares were down 5.7% to $14.90 in after-hours trading, as the
company offered a muted expectation for the current quarter and
trimmed its full-year revenue guidance.
Dell expects third-quarter revenue to be "roughly flat" on a
sequential basis, while analysts polled by Thomson Reuters
projected a 3.4% increase from the second quarter's total.
The company also lowered its full-year revenue outlook, now
seeing growth of 1% to 5%, down from a prior estimate of a 5% to 9%
increase. Earlier Tuesday, Wells Fargo estimated Dell would offer a
conservative guidance for the remainder of 2011, citing the
deteriorating sentiment on information-technology, or IT, spending
over the last month.
Top computer makers are facing challenges as tablet computers
such as Apple Inc.'s (AAPL) iPad attract the interest of consumers
and corporations. Technology-market watchers Gartner Inc. and IDC
in June each cut their forecast for global personal-computer
shipment growth this year, citing a weaker economic environment,
competition from portable devices and tighter consumer
spending.
Dell reported revenue from desktop personal computers, or PCs,
decreased 3.5% in the latest quarter. The company has sought to
reduce its reliance on low-margin desktop and laptop computers by
acquiring higher-end technologies.
Investment firm Susquehanna recently warned that back-to-school
spending on PCs was coming in "very weak," and said budget
constraints in the civilian government sector has spread to
Department of Defense contracts, which tend to be longer-term
deals.
For the quarter ended July 29, Dell reported earnings of $890
million, or 48 cents a share, up from $545 million, or 28 cents a
share, a year earlier. Excluding acquisition-related charges and
other impacts, adjusted earnings grew to 54 cents a share from 32
cents. Analysts surveyed by Thomson Reuters expected 49 cents.
Revenue inched up 0.8% to $15.66 billion. In May, the company
projected "mid-single digit [percentage] revenue growth" from the
first quarter's $15.02 billion.
Gross margin improved to 22.5% from 16.6%.
Revenue from the mobility segment--mostly notebook computers,
but also other mobile devices--grew 1.3%.
Revenue climbed 0.8% from the large enterprise customer segment
and 4.9% for small and medium businesses. It decreased 2.7% for
public customers but rose 1.3% for the consumer segment.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com