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 user 2005-02-14 at 9:47:00 am Views: 38
  • #10245
    Profits drop at PC giant Dell
    Computer industry bellwether Dell has reported an 11% drop in
    quarterly profit because of a one-off tax charge.

    Net income in the three months to 28 January was $667m (£357m) from $749m a
    year earlier. Sales were up 17% at $13.46bn-just below market targets.

    Dell paid $280m in taxes during the quarter so it would now qualify for a Lower tax rate on overseas profits.

    Dell shares fell 4% in trading in New York on Friday, as analysts questioned
    future sales.

    Convince us

    Goldman Sachs analyst Laura Conigliaro said that the reported quarter, the
    fiscal fourth, was the third in a row that the market had been disappointed.

    Dell, the world’s biggest maker of computers, had set itself a target of
    $60bn in annual revenues, a figure that it failed to hit during the past fiscal

    “Why should we be optimistic about fiscal ’06 or even beyond that?” Ms
    Conigliaro asked.

    Consumer demand during the past quarter was “slower” than Dell had
    anticipated, while shipments rose by 19%, just below the 20% figure predicted by
    the company.

    To keep sales up, the company cut prices, a move that also helped it win
    market share from rivals such as IBM and Hewlett-Packard.

    Bright side

    Without the tax charge Dell would have posted record fourth quarter profit
    and said it is well placed to drive earnings growth.

    Dell chief executive Kevin Rollins said the PC maker expects earnings to
    climb to 37 cents per share in the current quarter, from 26 cents a share in the
    three months to 28 January.

    “We are high on the company and believe that the market is going to be pretty
    good,” he said at news conference.

    Dell said it expects sales to top $60bn in the 12 months ending January 2006
    and set a new annual revenue target of $80bn.

    The new target comes after Dell has increased its market share in the PC
    market, as well as expanding into the server, storage, networking, printer and
    consumer products markets.

    During the fourth-quarter sales rose 22% in Europe,the Middle East and
    Africa, and 21 percent in Asia.

    Sales to US corporate clients were 19% higher than in the same period a year