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Dell revenue forecast falls short of analysts' estimates

Dell expects its first-quarter sales to slip 7% to $14.9 billion. Analysts were expecting $15.1 billion, on average. The PC maker is suffering from competition with Apple, Lenovo and Acer.

February 21, 2012|Bloomberg News

Dell Inc. forecast fiscal first-quarter revenue that missed analysts' estimates as lackluster demand for personal computers and competition from Apple Inc. eroded growth.

Revenue for the period ending in April will decrease 7% to $14.9 billion, Dell said Tuesday. That missed analysts' average estimate of $15.1 billion, according to data compiled by Bloomberg. Per-share earnings excluding certain items will exceed $2.13 in fiscal 2013, compared with analysts' $2.06 estimate.

The company's shares rose 5 cents to $18.21.

"When do we see revenue growth for the company start to show up?" said Abhey Lamba, an analyst at Mizuho Securities USA Inc. in New York. "They've been able to grow earnings because of cost management and supply-chain improvements. But you can do that for only so long. At a certain point, revenue needs to start growing or else earnings will come down."

Dell, the third-largest maker of PCs, is suffering from competition with Apple's Macs and iPads at the high end of the market and Lenovo Group Inc. and Acer Inc. at the low end.

Consumers are keeping their wallets closed amid a slow economic recovery or opting for iPads instead of traditional notebook computers. Global PC shipments last year declined 4.9%, the worst performance since 2001, according to research firm IDC. In addition, hard disk drive production was crimped after last year's flooding in Thailand.

Microsoft Corp.'s Windows 8 operating system, due out this year, may provide a lift to consumer PC sales. In addition, Dell is selling more of its own data storage and networking gear instead of relying on products made by such companies as EMC Corp.

Profit in the fourth quarter at the Round Rock, Texas, company declined to $764 million, or 43 cents a share. Sales rose 2% to $16 billion, in line with analysts' estimates.

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