PROFITS DROP AT PC GIANT ……..DELL !!!

[Anonymous]

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
year.

“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
earlier.

[Author]

February 14, 2005 at 9:47 AM