DELL 4TH Q. EARNINGS DROP 33%

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DELL 4TH Q. EARNINGS DROP 33%

 user 2007-03-05 at 12:16:00 pm Views: 55
  • #17614

    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.