Dell revenue forecast misses estimates
Dell Inc. forecast third-quarter revenue that missed estimates and cut its full-year profit outlook as its personal computer business dwindles amid a slow global economic recovery and competition from tablets.
Revenue will decline 2% to 5% in the quarter, the Round Rock, Texas company said. That is the equivalent of $13.8 billion to $14.2 billion in sales, less than the $14.9 billion average analyst estimate, according to data compiled by Bloomberg.
Chief Executive Michael Dell’s strategy of using acquisitions to add software, storage and networking equipment has been slow to offset declining sales of desktops and laptops, which account for about half of revenue. Consumers and businesses increasingly favor tablet computers such as Apple Inc.'s iPad over traditional machines.
“In PCs, price pressure continues, and the iPad isn’t helping,” said Shaw Wu, an analyst at Sterne Agee & Leach in San Francisco.
Dell shares fell as much as 4.6% to $11.77 in extended trading after closing down 1.8% to $12.34 before the earnings news. The shares have lost 16% this year.
Fiscal 2013 earnings excluding some items will be at least $1.70 a share. That’s less than the company’s February projection of at least $2.13 a share, and also missed the average $1.90 estimate.
Second-quarter net income fell to $732 million, or 42 cents a share, from $890 million, or 48 cents, a year earlier. Earnings excluding some items were 50 cents a share, compared with an average analyst estimate of 45 cents.
Sales in the second quarter, ended in July, declined 7.5% to $14.5 billion, missing analysts’ $14.6 billion average estimate.
Consumer revenue tumbled 22% to $2.6 billion in the quarter, hampered by waning demand for PCs. Sales of enterprise services and solutions, which includes data-center products customers,
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