Dell Q4 Earnings Suffer: Company to Continue Focus on Enterprise Business

February 22, 2012 2:16 AM EST

Dell reported a fiscal fourth-quarter profit of $764 million, or 43 cents a share, compared with a profit of $927 million or 48 cents a share for the year-earlier period, weighed down by weak consumer PC sales, pricing and supply issues caused by the floods in Thailand.

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Dell was challenged by pricing and supply issues related to hard drives, especially in its consumer PC business, said Brian Gladden, chief financial officer at Dell.

Dell's revenue for the quarter was $16 billion, growing by just 2 percent year over year. Revenue for the consumer segment was $3.2 billion, down 2 percent. It reported sales declines in the public sector and consumer markets. On the other hand, Dell cited sales gains in the large enterprise and small and mid-size IT market.

For the current quarter, the company said it expects revenue to drop about 7 percent sequentially, which translates to a sales forecast of $14.91 billion.

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Dell has been trying to reduce its dependence on consumer PCs, where profit margins are lower, and expand in its higher-margin enterprise business. Dell, the third-largest maker of PCs, is suffering from competition with Apple's Macs and iPads at the high end of the market and Lenovo Group Inc. and Acer Inc. at the low end.

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Dell will continue to focus heavily on its enterprise business in the year ahead, Gladden said. It has pumped billions into research and development for server and data center products last year and will continue to do so in fiscal 2013, he added.

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