Dell Shares Fall 5 Percent After Earnings Miss

Dell reported fourth-quarter earnings two cents below estimates as revenue rose slightly above expectations.

Follow us

The company reported operating earnings of 51 cents a share, on revenue of $16 billion, about $500 million above them.

Dell shares had surged nearly 25 percent this year. They fell 3 percent as soon as earnings were announced, apparently because the results did not exceed estimates, like those for Apple.

"We are more committed than ever to both developing and investing in innovative solutions," said founding CEO Michael Dell. At the same time, Dell estimated first quarter revenue will slide another 7 percent, to about $14.9 billion, compared with analysts' estimates of at least $15.1 billion.

Growth in PC sales is hardly skyrocketing. For 2011, market researcher Gartner estimates, Dell's increase was a meager 1.8 percent although that was nearly triple the anemic 0.5 percent growth in the overall market.

Dell's share was 12.1 percent of the overall 352.8 million PCs shipped, Gartner said. Only Hewlett-Packard and China's Lenovo Group sold more.

Revenue was expected to rise only 1 percent to $15.94 billion from the year-ago figure or only $57 million from last quarter's $15.37 million. In fact, it was $16.03 billion.

Dell, which closed its fiscal year Feb. 2 like most major retailers, reported full-year net income of $2.13 a share on revenue of $62.07 billion, far better than 2011's net of only $1.35 on revenue of $61.49 billion.

Last quarter, Dell, generated nearly 20 percent of revenue from services, mainly software, which generates higher margins than selling PCs and servers. That was 6 percent ahead of 2010 and helped Dell increase its gross margins to 22.6 percent from only 19.5 percent a year earlier.

Dell has acquired various services providers in recent years including Perot Systems, SecureWorks and Compellent, which enable the company to better compete against rivals Hewlett-Packard, No. 1 in computer services and PCs, and IBM.