By Nathalie Tadena
Dell Inc.'s (DELL) fiscal first-quarter earnings dropped 79%,
missing Wall Street expectations, as the computer maker reported
weaker revenue in its computing segment and narrower margins.
The quarter marks Dell's sixth straight period of year-over-year
profit declines amid an industry-wide slump in PC sales as tablets
and smartphones become more popular devices.
The report, which was pushed up three business days, comes as
founder and Chief Executive Michael Dell is seeking to take the
company private in a $24.4 billion deal. The company has said it
can more easily make the necessary changes to turn itself around
without the scrutiny and limitations of being a public company.
However, the $13.65-a-share deal from Silver Lake Partners and Mr.
Dell has raised the ire of some shareholders, including Dell's
largest outside shareholder Southeastern Asset Management Inc. and
activist investor Carl Icahn. Last week, they proposed an
alternative offer.
Dell, meanwhile, said earlier this week that it would accelerate
the earnings report without disclosing a reason.
In recent years, Dell has looked to move away from its reliance
on PCs, building out a portfolio of products and services that it
can sell to businesses. Those include security software, storage
systems, networking gear, which usually have higher profit margins
than PCs.
Revenue from the company's end user computing segment fell 9.3%.
Within that segment, desktop and thin-client revenue declined 1.9%,
while mobility revenue was down 16%. Enterprise solutions revenue
was up 9.8%, while services revenue improved 1.7%. The company's
software unit had revenue of $295 million, resulting in an
operating loss. The company recently realigned its operating
segments.
Overall, Dell reported a profit of $130 million, or seven cents
a share, for the quarter ended May 3, down from $635 million, or 36
cents a share, a year earlier. Excluding amortization, severance
and acquisition-related charges and other items, per-share earnings
fell to 21 cents from 43 cents. Revenue slipped 2.4% to $14.07
billion.
The results were in line with those estimated on Tuesday by The
Wall Street Journal, which cited a person briefed on the
results.
Meanwhile, analysts polled by Thomson Reuters most recently
projected a per-share profit of 35 cents and revenue of $13.5
billion.
Gross margin narrowed to 19.5% from 21.3%. Operating expenses
were up 12%.
Shares were off by three cents to $13.40 after hours. The stock
is up 32% since the start of the year.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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