Dell's U.S. sales fall, profits disappoint
SAN FRANCISCO -- Sales in Dell's U.S. consumer division fell 6% in the computer maker's fiscal third quarter, which ended Nov. 2. Dell didn't say how much money the unit lost.
Problems included a "failed back-to-school product launch," says tech analyst Samir Bhavnani of research firm NPD. Dell announced a line of new products, including brightly colored laptops, then had trouble filling orders.
Revenue of $15.6 billion rose 9% from $14.8 billion a year ago. But the benefit didn't translate into a big boost in profits. Net income of $766 million, or 34 cents a share, rose from $601 million, or 27 cents a share, a year ago.
(The numbers included a tax benefit, plus charges relating to layoffs, cutbacks and an accounting restatement announced earlier this year. Combined, the credit and charges lowered net income by 1 cent.)
The news, released after the market closed, sent Dell shares tumbling 9.7% to $25.42 in after-hours trading.
Its shares tumbled $3.80, or 13.5%, to $24.33 in afternoon trading Friday.
"People were looking for them to tighten the reins," said equity analyst Brent Bracelin at Pacific Crest Securities.
Dell executives agreed. Costs "are still considerably higher than we want (them) to be," Vice Chairman Donald Carty said on a much-anticipated conference call. "We are confident that we can run this business more efficiently."
Carty and CEO Michael Dell fielded questions from analysts Thursday after canceling several similar meetings in the past year. The company cut back its financial disclosures after revealing accounting problems related to how it recognized revenue. Dell restated several years of earnings last August, but it remains under investigation by the Securities and Exchange Commission.
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