DELL ( $26 dwn $24 1/2)Issues Second-Quarter Warning
By Thomas Lepri
Senior Writer
5/17/01 5:42 PM ET
Updated from 4:30 p.m. ET
Just as it said it would do last week, Dell (DELL:Nasdaq - news) after the close of regular trading Thursday released fiscal first-quarter earnings that matched analysts' expectations.
But the company also said it expects sales to fall 3% to 5% this quarter from the first quarter, according to Reuters. The news service also said the company expects to earn 15 cents to 17 cents in the second quarter, which ends in July. Analysts were projecting it would earn 18 cents in the period.
In the first-quarter ended May 4, the Austin, Texas-based PC maker reported earnings of $462 million, or 17 cents a share. That's exactly the figure that analysts polled by Thomson Financial/First Call were looking for, but it's down from the 19 cents a share Dell earned last year. Sales, meanwhile, totaled $8 billion, in line with estimates and 10% higher than their level a year ago.
No surprises here. Dell had told investors last week that it expected to post these very results, which are in line with the lowered outlook the company gave when it reported its fiscal fourth-quarter results in mid-February.
Despite stumbling on a sharp growth slowdown, Dell has become something of a Wall Street darling this year, gaining 45% as investors have taken the view that its aggressive pursuit of market share will hurt every other company much worse than it will hurt Dell. So far, that theory has been borne out by the difficulties experienced by Dell's competitors: IBM (IBM:NYSE - news) and Compaq (CPQ:NYSE - news) each lost money in their PC units in their most recent quarters, while Hewlett-Packard (HWP:NYSE - news) merely managed to break even.
"We have one-tenth of the inventory of our closest competitor, and our operating expense as a percent of revenue is about one-half theirs, but our market share and operating margin increased sequentially,'' James Vanderslice, president and chief operating officer, said in a statement. "That's the power of the direct model.'' |
