Dell Delivers Another Profit Warning

From Reuters:

Dell Inc. slashed its outlook on Friday, warning that quarterly earnings would fall about 30 percent short of forecasts because of a slowdown in the computer market, driving its stock to nearly five-year lows.
Shares of the world’s biggest personal computer maker fell 12 percent after it issued the disappointing outlook, which it blamed on discounting in a softening market for computers. The result, it said, would be second-quarter earnings of 21 cents to 23 cents a share on revenue of about $14 billion.
The company, whose sales have slowed in recent quarters amid tough competition from Hewlett-Packard Co. and complaints about poor after-sale services, had been expected to earn 32 cents a share on revenue of $14.2 billion, according to analysts polled by Reuters Estimates.
“Dell, they are having problems because internally they are in disarray,” said Eric Ross, an analyst at ThinkEquity Partner, who has a “sell” rating on the stock.
“Dell has done an amazing job of growing, but they don’t know how to retrench very well. Inside Dell, they don’t know where to turn,” he said.
Rather than its own problems, Dell pointed to broader industry challenges as the reason for its earnings warning. Analysts said those issues could indeed bite rivals like HP, whose stock fell 3.5 percent.
But they also said any industry troubles would hurt Dell more than others, exacerbating problems that have already caused the company to post disappointing revenue in four straight quarters.

Posted by on July 21st, 2006 at 12:06 pm


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