Dell shares plunge on lower profit

From Times Wire Services

Computer maker Dell Inc. said Thursday that its fiscal second-quarter profit fell 17%, hurt in part by lower prices and restructuring charges. The earnings were short of Wall Street estimates, and Dell shares plunged.

Dell’s net income dropped to $616 million, or 31 cents a share, in the quarter that ended Aug. 1, from $746 million, or 32 cents, a year earlier. Sales rose 11% to $16.4 billion, ahead of Wall Street’s prediction for $15.9 billion.

Excluding amortization and business realignment charges, Dell said it would have earned 33 cents a share. Analysts surveyed by Thomson Reuters had forecast a profit of 36 cents a share.

Investors sent Round Rock, Texas-based Dell shares down $2.54, or 10%, to $22.67 in after-hours trading. Before the earnings news, the stock dropped 42 cents to $25.21.


Dell said lower PC prices cut into earnings. Chief Financial Officer Brian Gladden said Dell made “strategic pricing” changes in Europe, the Middle East and Africa to speed up growth. The company also deferred some profit from that region to a later quarter.

Gladden also indicated that as Dell’s presence in retail stores grows, the company is taking aim at back-to-school shoppers with lower prices.

Dell said that operating expenses fell to their lowest point in six quarters, and that the company would reach its goal of 8,900 jobs cut in the current quarter. Since the target was set last year, Dell has cut more than 8,500 workers.