Dell Reports Q4 Earnings

Posted Feb 19, 2013

Dell has reported their fiscal Q4 earnings.  The company’s earnings fell 31% and they recorded double-digit revenue declines from their PC and mobile segments.  Dell has now reported 5 straight quarters of profit declines while citing growing pressure from tablets.  The company is also seeing intense price competition and macroeconomic issues.

Dell agreed to be taken private by a group of investors including founder Michael Dell as part of a deal worth $24.4 billion.  Michael Dell believes that they can easily make the changes to turn the company around without the scrutiny of being a public company.  By going private, Dell would no longer have to report their quarterly earnings.  Dell said that they are not going to be providing guidance for fiscal 2014 or the current quarter because of their decision to go private.  Dell agreed to go private at $13.65 per share.

Dell used to be the world’s largest PC company, but they have been hit hard with the popularity of smartphones and tablets.  PC sales have been shrinking at a rapid pace.  The company is going to be expanding beyond the PC business and will be expanding into high-margin businesses.  To diversify their products and services, Dell has acquired several companies.

This past quarter, Dell’s revenue from their desktop PCs dropped 14%.  Revenue from notebook computers and other mobile devices dropped 25%.  The company’s software and peripherals business was down 11% and service revenues dropped 3.1%.  The company’s server and networking revenues shot up 18% though.

In the quarter ended February 1st, Dell reported a profit of $530 million (30 cents a share), which is down from $764 million (43 cents per share) one year earlier.  Revenue totaled $14.31 billion, which is an 11% decline from one year earlier.

The company’s public-customer segment revenue decrease 9.4% and their large-enterprise-customer segment revenue declined 6.6%.  Revenue for the consumer segment dropped 24% for the latest period.  Dell’s small and medium-business revenue was down 4.6%.

[Source: WSJ]