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TMCNet:  Dell Inc.'s revenue, earnings drop in fiscal 4th quarter

[February 19, 2013]

Dell Inc.'s revenue, earnings drop in fiscal 4th quarter

Feb 19, 2013 (Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) -- Dell Inc. finished its fiscal year on a down note with lower profits and revenue tied to continued competitive challenges in its personal computer business.


The Round Rock-based computer maker reported a profit of $530 million, or 30 cents a share, on revenue of $14.3 billion for the quarter ended Feb. 1. Revenue was down 11 percent from a year ago, while profits dropped by 31 percent.

The company, which has agreed to a $24.4 billion buyout led by founder and CEO Michael Dell, reported that much of its revenue decline was tied to sales of mobile and desktop personal computers.

The company declined to answer questions about the proposed buyout during a call with analysts. Michael Dell was not on the call. The company did not offer guidance for the current quarter or the new fiscal year, due to the pending buyout.

Dell Inc.'s fourth quarter results were slightly better than the average estimate of analysts. Dell's stock price dropped by 1 cent Tuesday to close at $13.81 a share.

Dell Inc. agreed to the buyout offer of $13.65 a share on Feb. 5 and now is in a 45-day "go-shop" period where it attempts to find a superior offer.

Several major shareholders in the company have said they don't like the buyout deal as priced, leading some investors to believe the company will raise the offer price. Dell has been reported to be seeking to talk with major shareholders to explain its position on the price of the offer.

The company disclosed last week that Michael Dell agreed to take a lower valuation for his company shares in the buyout in order to facilitate a higher price for the remaining shares. The company estimates that it could have a shareholder meeting on the buyout offer by late June or early July.

In reporting on its product segments, Dell cited strong growth in sales of servers and networking equipment but continued weakness in personal computers. Server and networking sales totaled $2.6 billion in the quarter, up 18 percent from a year ago.

But sales of mobility products, mostly notebook computers, totaled $3.7 billion, down 25 percent, and sales of desktop computers totaled $3.2 billion, down 14 percent.

Sales were down by 14 percent in Europe and the Middle East, down 10 percent in the Americas and down 9 percent in Japan and East Asia.

While sales of personal computers were weak, the company said it used about $250 million in revenue from a vendor settlement in the quarter to selectively cut prices to key commercial customers, where it expects future sales growth.

"Clearly there were places where we needed to get more aggressive (on pricing) and we did capture business in larger long-term relationships that we think will pay off in larger revenue going forward," said Brian Gladden, Dell's chief financial officer. Gladden said the company generated $1.4 billion in cash flow from operations in the quarter.

For the entire fiscal year, Dell reported a profit of $2.4 billion, or $1.35 a share, on revenue of $56.9 billion. That compared with a profit of $3.5 billion, or $1.88 a share, on revenue of $62.1 billion a year ago.

___ (c)2013 Austin American-Statesman, Texas Visit Austin American-Statesman, Texas at www.statesman.com Distributed by MCT Information Services

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