Dell Warns 1Q Earnings Will Miss Mark
Amid stiffening competition, computer maker Dell Inc. said Monday its fiscal first-quarter results will miss earnings targets, blaming the shortfall on "pricing decisions."
Amid stiffening competition, Dell Inc. said Monday its fiscal
first-quarter results will miss earnings targets, blaming the shortfall on "pricing
The news sent Dell shares falling nearly 6 percent to a 52-week low.
The 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.
The news, released after the close of trading, sent shares of the tech bellwether
tumbling nearly 6 percent.
Dell, which sells computers directly to consumers and is the world's largest
PC maker, previously forecast a profit ranging from 36 cents to 38 cents per
share, including stock-option costs of 3 cents, on revenue of $14.2 billion
to $14.6 billion.
Dell said the shortfall from the previous guidance stems primarily from pricing
decisions in the second half of the quarter that the company expects will accelerate
revenue growth in the future.
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
Company officials declined to comment further. Dell will report first-quarter
earnings on May 18.
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. Though Dell shipped 10.2 percent more
PCs than it did in last year's first quarter, Gartner said the growth rate was
Dell's slowest since the third quarter of 2001.
Dell shares fell 5.7 percent, or $1.51, to $24.93 on news of the revised guidance
in late-session trading. Earlier, the stock rose 75 cents, or almost 3 percent,
to close at $26.43 on the Nasdaq Stock Market. Dell shares are down nearly 12
percent so far this year, and hit a new 52-week low Monday after the bell.