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Dell Misses Sales Targets as It Focuses on Margins

Tuesday, 15 Nov 2011 04:56 PM

Dell Inc., the third-largest personal-computer maker, reported sales that missed analysts’ estimates, even as its focus on higher-margin technology boosted profit.

Third-quarter revenue declined to $15.37 billion, Round Rock, Texas-based Dell said Tuesday in a statement. Analysts had projected $15.7 billion on average, according to Bloomberg data. Net income rose to $893 million, or 49 cents a share, from $822 million, or 42 cents, a year earlier. Excluding some costs, profit was 54 cents a share, topping the 47-cent estimate.

Dell, once the world’s largest PC maker, has ceded market share and focused on more profitable corporate technology, including servers, services and networking. The company also reined in its sales outlook for the year today. Flooding in Thailand has hurt production of PC hard drives, dimming the PC industry’s prospects for the next few months.

Dell fell 2 percent to $15.31 in late trading after the report. The shares, up 15 percent this year, had closed at $15.63 in New York.

Revenue will increase 1 percent to 5 percent this fiscal year, which ends in January, Dell said. The growth is “trending” to the lower end of that range, the company said. Analysts had predicted sales growth of 2 percent.

Business Focus

Under Chief Executive Officer Michael Dell, the company is winnowing its line of consumer products and focusing its attention on the small and medium-size businesses and government agencies that account for more than half its sales.

The company plans to keep making acquisitions to expand in hardware and software for corporate and government data centers, its CEO said at a company conference last month. The diversification beyond desktop and laptops comes as PC sales ebb. Market researcher IDC cut its PC shipment forecast on Nov. 10 after the Thailand flooding.

Rising waters have swamped industrial parks in the country, where companies such as Western Digital Corp. and Toshiba Corp. make about a quarter of the world’s disk drives. The flood has caused drive prices to increase by $10 to $25, Seagate Technology Plc Chief Executive Officer Steve Luczo said in a interview this month.

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Dell Inc., the third-largest personal-computer maker, reported sales that missed analysts estimates, even as its focus on higher-margin technology boosted profit.Third-quarter revenue declined to $15.37 billion, Round Rock, Texas-based Dell said Tuesday in a statement....
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Tuesday, 15 Nov 2011 04:56 PM
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