Dell Inc.'s (DELL) fiscal second-quarter earnings fell 18% as
the computer giant recorded weaker revenue, led by declines in its
consumer segment.
Shares slid 3.7% to $11.89 after hours Tuesday as revenue missed
the company's expectations. Dell also lowered its full-year
guidance and offered downbeat revenue guidance for the current
quarter.
Dell, one of the world's biggest personal-computer makers, now
sees full-year earnings of at least $1.70 a share. It had
previously forecast earnings to exceed the $2.13 recorded in fiscal
2012.
Dell forecast third-quarter revenue to decline 2% to 5% from
sequentially, which would amount to a range of about $13.76 billion
to $14.19 billion. Analysts polled by Thomson Reuters most recently
projected revenue of $14.85 billion.
Dell, which in recent years has looked to move beyond its core
personal-computer business and broaden its own portfolio of
products for corporate customers, faces stiff competition across
its business lines. Dell has noted that some consumers were putting
off computer purchases and instead focusing their attention on
mobile devices.
Faced with soft PC sales, Dell has attempted to boost both
revenue and profit by acquiring higher-margin businesses, including
data-storage, security and networking technologies. The company has
made a number of acquisitions in recent months, unveiling in July
plans to buy business-software maker Quest Software Inc. for $2.36
billion.
"Growth in our PC business was challenging, as we saw a tough
macroeconomic and competitive environment, and continued to focus
on higher-value solutions in this business," said Chief Financial
Officer Brian Gladden.
In the latest quarter, Dell's revenue from desktop personal
computers declined 8.9%.
For the quarter ended Aug. 3, Dell reported a profit of $732
million, or 42 cents a share, down from $890 million, or 48 cents a
share, a year earlier. Excluding acquisition-related charges and
other items, per-share earnings fell to 50 cents from 54 cents.
Analysts polled by Thomson Reuters had projected a per-share
profit of 45 cents.
Revenue was $14.48 billion, a 7.5% decline from a year earlier
and a 0.4% increase from the first quarter.
Dell's downbeat view in May called for revenue to increase 2% to
4% from the first quarter's $14.42 billion.
Gross margin narrowed to 21.6% from 22.5%.
Revenue from the mobility-product category, which includes
notebook computers and other mobile devices, declined 19%.
Revenue in the consumer segment sank 22% in the latest period,
following a 12% decline in the first quarter.
The public customer segment's revenue slid 6.1% while the large
enterprise customer segment's revenue slipped 3%. Revenue from
small and medium businesses fell 1.5%.
The stock, which hit its lowest level in about two years earlier
this month, has fallen 18% over the past three months, though the
close of trading Tuesday.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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