DELL WARNS OF PROFIT SHORTFALL

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DELL WARNS OF PROFIT SHORTFALL

 user 2006-05-10 at 10:43:00 am Views: 52
  • #15395

    Dell Warns of Profit Shortfall, Cites Lower Pricing
    May , 2006
    Dell
    Inc. issued a warning to investors Monday, saying that preliminary
    numbers for the company’s 4th quarter, which ended May 5th, suggest a
    profit of $.33 per share, shy of the $.36 – $.38 per share the company
    had forecast in February. The company blamed price decreases for its
    computers as the primary reason behind the earnings shortfall.Dell’s
    share price fell by $1.63 to $24.80 per share in after hours trading,
    as investors reacted negatively to Monday’s news. Analysts said that
    competition from other low-end manufacturers from Asia, most notably
    China’s Lenova, have cut into the company’s profit margins.Perhaps in
    response to that competition from Asia, Dell announced it would be
    setting up a new “technology and development center” in Cyberjaya,
    Malaysia. The Star reported Monday that the facility will host up to
    1,000 employees, and focus on process design and software
    development.Reuters reported that Dell plans to ramp up buying from
    Taiwan in 2006, spending some $12 billion on components from that
    country. That’s a 20% increase in purchasing from Taiwan, which earned
    some $10 billion in business from Dell in 2005. Dell is based in Round
    Rock, TX.Dell will officially announce the quarter’s results on May
    18th.