DELL 4TH Q. EARNINGS DROP 33%

[Anonymous]

Dell Fourth Quarter Earnings, Revenues Drop
DALLAS
(March 07) – Dell  Inc.’s fourth-quarter profits plunged 33 percent
because of weak sales of laptops and notebooks, and the computer maker
still faces an unresolved federal accounting probe, customer service
complaints, several shareholder lawsuits and stiff competition from
rivals.But amid another disappointing quarter, analysts said Dell at
least appears ready to do something about its many problems, even if it
takes years to resolve.Dell said it earned $673 million, or 30 cents
per share in the quarter ended Feb. 2, compared with $1.01 billion, or
43 cents per share a year earlier. Revenue fell 4 percent, to $14.4
billion.Analysts had expected the PC maker to earn 29 cents per share
in the most recent quarter, according to a survey by Thomson Financial.
The company didn’t provide year-ago figures in its release.Most glaring
was the revenue shortfall in mobility products and desktop PCs, which
combined, account for 58 percent of Dell’s revenue.Mobility products,
which includes notebook computers, fell 2 percent to $3.8 billion
despite a 2 percent increase in units shipped. Desktop PCs, meanwhile,
saw an 18 percent decline in units year-over-year – despite the launch
of Microsoft  Corp.’s new Vista operating system.Analysts speculated
that Dell’s direct-sales model, which allows business and consumers to
buy equipment directly from the company, is no longer the best way to
sell products, especially portable, personal devices like
notebooks.Shifting tastes mean many consumers want to pick up and
examine notebooks before they buy one, analyst Tim Bajarin of Creative
Strategies said.Just look at rivals like Apple  Inc. and
Hewlett-Packard  Co., which during the same period saw robust sales of
laptops because of good marketing and widespread retail availability,
Bajarin said.”I do believe Dell’s going to have to be much more
creative in reaching out to new customers who traditionally would only
look at retail,” he said.Dell’s results, issued in the form of a press
release, mentioned several turnaround plans, including streamlining
operations, shortening product development cycles and developing new
approaches to manufacturing and distribution.While specifics weren’t
mentioned, Dell’s willingness to at least mention some changes was
encouraging, said Carmi Levy, senior research analyst with Info-Tech
Research Group.”It’s a matter of going into new businesses, trying to
compete beyond the core hardware market,” he said. “But these are
things that do not change overnight, these are yearslong strategies.”In
January, Michael Dell  resumed control of the company he founded as
chairman and chief executive officer. He replaced his hand picked
successor, Kevin Rollins, who stepped down in January.His first action
has been to revamp his top executive team, luring top corporate
executives from Motorola  Inc. and Solectron  Corp. in recent weeks. In
December, Dell replaced its chief financial officer with Donald Carty,
the former chief executive of AMR  Corp., parent of American
Airlines.Meanwhile, Dell has yet to resolve an accounting investigation
led by the Securities and Exchange Commission.The U.S. attorney for the
Southern District of New York has also subpoenaed documents related to
Dell’s financial reporting from 2002 to the present.It means Dell’s
earnings statements from the second, third and fourth quarters are
preliminary and have yet to be filed with the Securities and Exchange
Commission. Dell said he was working as quickly as possible to resolve
its many problems but did not offer any time frame.”We won’t achieve
our goals overnight, but we will achieve our goals,” Dell said in a
release. “We will be known again for strong operating and financial
performance and a great experience for our customers. But it will take
time to realize the future benefits of the improvements we are making
today.”Roger Kay, president of Endpoint Technologies Associates Inc.,
said he was concerned about the myriad issues Dell faces. But he said
like other large companies that have faced tough times, it should be
able to turn things around eventually.”The fact that they can’t say
when it’s going to get any better, those things are not very
reassuring,” Kay said. “But it doesn’t mean that they won’t get it back
together. I have a lot of faith that they’re going to pull it together
over time.”Dell shares closed up 16 cents to $23.01 Thursday on the
Nasdaq Stock Market, then in after-hours trading. Its shares have
ranged from $18.95 to $30.80 in the past year.

[Author]

March 5, 2007 at 12:16 PM