Dell 4Q earnings, revenues drop

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.

Dell said it earned $673 million, or 30 cents per share in the quarter ended Feb. 2, compared to $1.01 billion, or 43 cents per share a year earlier. Revenue fell 4 percent, to $14.4 billion.

Analysts had expected the PC maker to earn 29 cents per share in the most recent quarter, according to a survey by Thomson Financial. The company didn't provide year-ago figures in its release.

Revenue from mobility products, which includes notebook computers, declined two percent to $3.8 billion despite a 2 percent increase in units shipped. Desktop PCs, meanwhile, saw an 18 percent decline in units year-over-year.

Combined, desktops and mobility products account for 58 percent of Dell's revenue.

"We are disappointed with the company's results, but what matters is our future plan of action. We are systematically moving to increase efficiencies, improve execution and transform the company," Chairman and Chief Executive Officer Michael Dell said in a release. "Our business model will become more aligned with the needs of our customers, which will improve their experience and yield improved growth and profitability for the long-term."

The latest results come as Dell tried to deal with a litany of issues including disappointing earnings, a still unresolved federal accounting probe, customer service complaints, several shareholder lawsuits and loss of market share to main rival Hewlett-Packard Co.

In January, Michael Dell resumed control of the company he founded as chairman and chief executive officer. He replaced his hand picked successor, Kevin Rollins, who stepped down from the company on Jan. 31.

Dell's earnings statements from the second and third quarters also remain preliminary and have yet to be filed with the Securities and Exchange Commission because of the ongoing federal accounting probe.

The U.S. attorney for the Southern District of New York has subpoenaed documents related to Dell's financial reporting from 2002 to the present.

Without getting into specifics, the company said it was working to reinvigorate itself by streamlining operations, shortening product development cycles and developing new approaches to manufacturing and distribution.

Dell's direct-sales model, which allows business and consumers to buy equipment directly from the company, turned it into a leading computer manufacturer and a Wall Street juggernaut with one successful earnings announcement after another.

But in recent years, the company has been stung by a market glut of low-cost, low-profit PCs and weaker-than-anticipated sales of its pricier, more lucrative desktops and notebooks.

Last year, Dell lost its No. 1 position in the industry to rival Hewlett-Packard, according to recent reports from IDC and Gartner Inc.

Michael Dell has also been revamping his top executive team, luring top corporate executives from Motorola Inc. and Solectron Corp. in recent weeks.

In December, Dell replaced its chief financial officer with Donald Carty, the former chief executive of AMR Corp., parent of American Airlines. Dell has also hired executives from General Motors Corp., Hewlett-Packard Co. and others.

Dell shares closed up 16 cents to $23.01 Thursday on the Nasdaq Stock Market, then fell 36 cents to $22.65 in after-hours trading. Its shares have ranged from $18.95 to $30.80 in the past year.

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