Dell Q2 2008 Earnings Report Paints an Incomplete Picture
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Yesterday's release by Dell Computer of very preliminary earnings numbers for its previous fiscal quarter may give investors at least a handful of data to help them understand the turmoil from which it may be recovering...if it is recovering. The company doesn't appear to be hemorrhaging, and there seems to be at least some good news. But it's hard not to keep seeing question marks and unresolved issues.
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In the annals of computer news, reports of Dell being near to using AMD products have become something akin to UFO sightings: lots of circumstantial evidence surfaces, but it never really quite happens.
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(InfoWorld) - With U.S. markets closing for Thanksgiving, Google Inc.'s skyrocketing share price andÂ Dell Inc.'s earnings report are ending the fall trading season on a high note. Both developments, which pushed the Nasdaq Composite Index to rise 11.14 points and close at 2465.98 before the Thanksgiving break, highlight positive underlying trends but are shadowed by questions about long-term profits. Google (ticker symbol: GOOG), breaking the US$500 share-price mark Tuesday and staying above the magic number until Thanksgiving, has a market value greater than any media company and all IT companies except for Microsoft Corp. and Cisco Systems Inc. Google's lead in online search helps it grab a lion's share of online advertising revenue. Earlier this month, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) reported that companies spent about $4.2 billion on online ads in the third quarter, as the market grew for the eighth consecutive quarter. But what happens when that growth inevitably slows? Google, expected to generate $2.8 billion in profit this year, is spending enough on R&D to defend its search turf and challenge Microsoft and other software developers in a new generation of Internet-based applications. It is hiring developers at a dizzying rate, and there's no doubt its young talent is generating a wealth of ideas. Most analysts polled by Thomson First Call expect shares to go higher still. Meanwhile, analysts applauded Dell's earnings report, issued Tuesday: Research firm Bear Stearns immediately boosted its rating from "peer perform" to "outperform" while Needham & Co. upped its rating from "hold" to "buy." Shares of Dell (DELL) jumped by $2.31, to close Wednesday at $27.13 Dell said third-quarter net income was $677 million and earnings per share were $0.30. This compares with a profit of $606 million last year, and earlier expectations of $0.24 per share, according to a survey by Thomson Financial. At first blush, the earnings look great. Dell's gross profit margin increased to 17 percent from 15.5 percent in its disastrous second quarter. Following Hewlett-Packard Co.'s tremendous report last week, when it said it quadrupled quarterly profit, this suggests that manufacturers may not have to rely on deep discounts going forward. Dell pointed to strong sales of servers based on Advanced Micro Devices Inc. chips, suggesting that the hardware market is invigorated by competition with Intel Corp. But Dell is under investigation by the U.S. Securities Exchange Commission for possible accounting misstatements. It still has not submitted a confirmed, official earnings report. The quarter's figures, as well as prior-quarter numbers, may be restated. Also, while Dell may be doing well in the server market, its notebook sales are not rising as fast as the market in general, and HP notebook sales growth is outpacing Dell's. Adding insult to injury, HP has overtaken Dell in PC sales. So while the hardware market is doing better than expected earlier this year, the spoils may not be evenly divided. Â
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(InfoWorld) - Dell Inc. Tuesday pointed to its adoption of processors from Advanced Micro Devices Inc. (AMD) for pushing it to US$677 million in profit for the third quarter, though the company has delayed reporting final numbers due to an accounting investigation by the U.S. Securities and Exchange Commission (SEC). Dell's preliminary results mark anÂ improvement over the third quarter last year, when it reported $13.91 billion in revenue and a profit of $606 million. Dell reported revenue of $14.38 billion for the quarter, which ended Nov. 3, 2006. Dell did not offer an official comparison to the year-earlier figures, however. Dell reported earnings of $0.30 per share for the third quarter in 2006, beating the estimates of analysts who had expected Dell to earn $0.24 per share on revenue of $14.44 billion, according to a survey by Thomson Financial. The company was scheduled to report its earnings last Thursday, but delayed the move because it was trying to cooperate with investigations by the SEC and the U.S. Attorney for the Southern District of New York. Company leaders had cited the same reason after they missed a deadline for notifying the SEC of their second quarter earnings. They have still not filed that report, called a Form 10-Q. Company executives were not available to comment on the results. The company filed the numbers in a press release only, skipping the traditional conference call with reporters and analysts. Dell pointed to its success in selling computers powered by AMD processors for its impressive numbers. After missing its earnings target for the first quarter, Dell said in May it would finally diversify from selling computers with chips from Intel Corp. Still, Dell is having a rocky year. In June, Chief Executive Kevin Rollins promised to rebound from weak earnings by investing $100 million in customer service and by using fewer rebates in setting PC prices. But in August, Dell was forced to recall 4.1 million defective laptop batteries. Next, Dell acknowledged it was under investigation by the SEC, and, last week, lost its status as world's largest PC vendor to rival Hewlett-Packard Co.(HP). HP turned up the pressure last week when it reported net income of $1.7 billion for the fourth quarter, more than four times its mark for that period last year. Â
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Credit Suisse First Boston maintained an &quot;outperform&quot; rating for Dell (nasdaq: DELL - news - people ) after the company expanded its line of consumer electronics (CE) products.
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"OK" results aren't good enough for Dell anymore. That's great news.
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By MATT SLAGLE  DALLAS - Dell Inc., which is the subject of a federal probe into its finances, said Thursday that fourth-quarter profits plunged 33 percent due to weak sales of laptops and notebooks, which account for the lion's share of its revenues.
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Dell&#39;s efforts to reinvent itself this year through a dramatic break from its direct-sales model, expanded services, and new enterprise offerings have shown positive early results, but some users have lingering concerns about supply chain management and support -- long-time issues for the company.Weathering an accounting scandal and a slump in profit,&#160;founder Michael Dell reclaimed the helm of the company after CEO Kevin Rollins resigned in January, quickly replacing top managers and in May announcing plans to lay off 10 percent of the company&#39;s workforce.For years, Dell was the top PC vendor in the world, an acknowledged master of logistics in a business where margins can be razor-thin. It was efficient enough to keep prices low to ward off competition without suffering big setbacks in profits. But by 2006, when Hewlett-Packard unseated Dell as global PC leader, that was no longer the case.Dell&#39;s plans to regain its former dominance have resounded in the market. The company&#39;s third-quarter results, announced two weeks ago, showed profit increasing year over year, and record revenue of $15.65 billion. During the company&#39;s earnings call, Michael Dell said the company will put products on more retail shelves worldwide while also helping business customers &quot;simplify IT&quot; and reduce maintenance costs via customized hardware, software, and services.The company has also moved to put accounting issues behind it, recently&#160;completing an internal investigation and restating its financial results from fiscal 2003 to the first quarter of 2007.The company has been making an effort to build relationships with customers and partners and deliver products that are easier to deploy and manage, said Charles King, principal analyst at Pund-IT.Last month, Dell introduced a two-tier channel program designed to give partners better access to Dell&#39;s training, marketing, certification, and online resources. The program will provide a better chance for Dell to interact and understand its partners&#39; needs, the company said.&quot;The company seems to recognize that it has bridges to enhance with customers and partners in the channel. It&#39;s not something that&#39;s going to change overnight,&quot; King said.After years of success selling PCs directly to users, the consumer business&#39; direct-sales business model hit a wall as component prices fell, Pund-IT&#39;s King said. The strategy to simplify IT is a play at SMBs that will help Dell deliver better returns in the long term than its lower-margin direct consumer business, analysts said.However, some customers continue to have concerns about the company&#39;s support and supply chain issues.Dell is having supply shortages and can&#39;t get its servers and OptiPlex desktops to individuals and small businesses in a timely manner, said Josh Kaplan, who runs a franchise of computer support firm Rescuecom and purchases parts and interacts with Dell on behalf of customers.&quot;You can acquire all the technology you want, but Dell will send hardware out blindly,&quot; Kaplan said. It will be a challenge for Dell to deliver what it calls &quot;IT in a box&quot; -- its terms for packages of products and services -- to SMBs and enterprises, Kaplan said. Dell has traditionally delivered mostly standardized systems, Kaplan said. While Dell has built systems to order by letting users select from a menu of options, it does not have in-depth experience offering customers services over the lifecycle of products, he said.Jeremy Cole, owner of Proven Scaling, a small consulting firm with offices in the U.S. and U.K., said Dell has internal staffing issues that affect its support services.&quot;Dell&#39;s sales structure is really strange. They tend to bounce your company around to a new account representative every few months who are wildly differing in experience, intelligence, and understanding of the Dell sales system,&quot; Cole said.Cole is satisfied with Dell equipment but said the company needs to show more support for open-source applications and the Linux OS. &quot;It&#39;s clear that Dell cares about Linux in that all its server-class hardware is well-supported by the Linux kernel and it has many people dedicated to making sure that&#39;s the case. However, it&#39;s not good enough just to boot,&quot; Cole said.Though generally positive about Dell&#39;s support, Jason Dunn, who runs Thoughts Media, which publishes Web sites for technology enthusiasts, couldn&#39;t resolve certain LCD&#160;monitor problems with Dell offshore support representatives. He had good experiences with Dell&#39;s PC and HDTV support representatives, so the experience varies, Dunn said.Other users have had a good experience with Dell&#39;s strategy to simplify IT. Dell&#39;s efforts have paid dividends for Bikeworld.com, a medium-size retail business in San Antonio, which saved money by cutting its internal IT person. The company uses Dell systems with Microsoft Dynamics Retail Management System, connected to multiple offices via a VPN.&quot;Businesses are in a belt-tightening mode. You can&#39;t have extra people on payroll,&quot; said Whit Snell, general partner at Bikeworld.com. Bikeworld has resolved IT problems with Dell remotely and has a contact readily available to help with problems.Dell officials were not available for comment on support issues.Overall, Dell is trying to be more proactive and helpful, said Kurt Scherf, vice president and principal analyst at Parks Associates. Dell&#39;s new enterprise support services to simplify IT, like remote management services, could, if successful, trickle into the consumer segment, which could benefit end-users, Scherf said.Dell this year has tied up with retailers like Staples,&#160;Wal-Mart, and&#160;Best Buy&#160;to distribute PCs, something competitors HP and Acer have been successful at. But if Dell wants to make sure its customers aren&#39;t tempted by HP or Lenovo in the retail market, fixing problems that some users report about its support infrastructure has to be on top of the company&#39;s to-do list, Pund-IT&#39;s King said.Building out retail partnerships changes the consumer-facing relationships for Dell, which could lead to positive changes in the company&#39;s support and services. The results are a work in progress, King said.Balancing out its business model, Dell is showing signs that renewed efforts in the higher-end business sector are catching on, with third-quarter revenue growing in the server and storage markets. The enterprise market provides better margins than retail, and the remote management services market is growing, King said. Dell is trying to address that through acquisitions and by creating a services organization and specialized products targeted at professionals and businesses.The company this year&#160;acquired SAN (storage area network) vendor EqualLogic&#160;and managed services companies&#160;Everdream&#160;and Silverback. It announced a deal with Sun to offer the company&#39;s Solaris OS.Dell has been pushing hard to improve its systems management portfolio, especially remote desktop management capabilities that could help simplify complex IT infrastructures. In October, the company announced On-Demand Desktop Streaming, a server-based platform that streams the OS, applications and data to diskless desktop clients over a Gigabit Ethernet network.By offering design improvements and bundling software and services like remote management, Dell is trying to get the focus off of price and moving to build the framework for a new business model for the enterprise, said John Spooner, senior analyst at Technology Business Research.Dell&#39;s reinvention should come as no surprise as Michael Dell is on a mission to reconstruct his company, Pund-IT&#39;s King said. &quot;It must have been hard for Dell to see a company he built falter,&quot; King said. He is putting money in the right spots, and competitors like HP and IBM will do well to keep a close eye on Dell, King said.
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Just two weeks afterÂ revealing that some employees had falsified corporate revenue to meet earnings targets, Dell reported a profit of $733 million for its fiscal 2008 second quarter, up 46 percent from its mark of $502 million for the same period last year.
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The computer maker's earnings hit estimates, but investors hoped for more.
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Dell Inc, the number two PC maker in the world, said it had received a notice from the Nasdaq Stock Exchange that it is not in listing compliance because of its delayed fiscal third-quarter report.
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DALLAS -- Dell Inc., the world's largest PC maker, has delayed filing its fiscal second-quarter financial report and suspended its share-repurchase program because of an ongoing federal accounting probe.
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DALLAS ---- Dell 's fourth--quarter profits plunged 33 percent because of weak sales of laptops and notebooks, and the personal computer maker still faces an unresolved federal accounting probe, customer service complaints, several shareholder lawsuits and stiff competition from rivals.
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Microsoft beat Wall Street expectations for both revenue and EPS (earnings per share) for its fiscal 2008 second quarter, attributing its strong quarter to sales of core client products, such as Windows Vista and Office 2007, as well as Exchange and SharePoint server software.For the quarter ended Dec. 31, Microsoft reported revenue of $16.37 billion, an increase of 30 percent year over year and a number that solidly beat the $15.95 billion in revenue that Thomson Financial analysts had estimated. Last year for the same period, Microsoft reported $12.54 billion in revenue.Diluted earnings per share were $0.50, an increase of 92 percent over the $0.27 in EPS reported last year, and $0.04 higher than Thomson Financial estimates of $0.46. Operating income for the quarter was $6.48 billion, an increase of 92 percent from the $3.47 billion reported for the same period last year.Microsoft&#39;s year-over-year percentage growth is higher than normal due to a deferral of $1.64 billion in revenue and operating income, as well as $0.11 of diluted earnings per share from the second to the third quarter of fiscal 2007. This deferred revenue contributed to the higher-than-average second-quarter percentage growth. Without these deferrals, second-quarter growth rates for revenue, operating income and earnings per share would be 15 percent, 27 percent and 32 percent, respectively, for the quarter reported Thursday.Ahead of Microsoft&#39;s announcement, analysts had expected the company to report a strong quarter even among economic uncertainty and fears that the U.S. economy is entering a recession.Microsoft&#39;s client business, on sales of Windows Vista, was especially strong in the quarter, with $4.34 billion in revenue compared to $2.59 billion in revenue a year ago. According to Microsoft, its client business has grown 20 percent on average since Windows Vista was made available nearly a year ago, and the company believes Vista began hitting its stride for adoption among customers and partners in the second quarter. According to Microsoft, it has sold more than 100 million licenses for Vista.Looking ahead to the next quarter, which ends March 31, Microsoft said Thursday that it expects revenue in the range of $14.3 billion to $14.6 billion; operating income in the range of $5.6 billion to $5.7 billion; and diluted earnings per share in the range of $0.43 to $0.45.For the full fiscal year ending June 30, Microsoft expects revenue in the range of $59.9 billion to $60.5 billion; operating income in the range of $24.2 billion to $24.4 billion; and diluted EPS in the range of $1.85 to $1.88.
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Dell Inc  said on Thursday it is delaying its fiscal 2008 second-quarter report until it has completed a financial restatement process.
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Fitch Ratings has placed Dell Inc.'s (Dell) ratings on Rating Watch Negative (RWN) following the company's decision to delay the filing of its Form 10-Q for the fiscal second quarter ended Aug. 4, 2006.
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Dell Inc. , the world's  second-largest personal computer maker, reported on Tuesday  quarterly earnings per share that topped Wall Street's average  estimate, sending its stock up nearly 10 percent.