Dell sales forecast misses estimate

Eric Auchard and Reed Stevenson

SAN FRANCISCO/SEATTLE: Dell Inc. posted a profit before charges in line with Wall Street estimates, but its sales forecast for the current quarter missed analysts' targets, and shares fell 3 percent

The world's largest personal computer maker reported net income, excluding a $280 million tax charge, of $947 million, or 37 cents per share, in the fiscal fourth quarter ended Jan. 28, compared with $749 million, or 29 cents per share, a year earlier.

"It looks pretty much in line on revenues and a small beat on earnings," said Chris Baggini, manager of the Gartmore Growth Fund. "I think some people are disappointed the revenue guidance for the next quarter is slightly below the street."

Including the charge, net income fell 11 percent to $667 million, or 26 cents a share. Revenue rose 17 percent to $13.46 billion from $11.51 billion.

Dell Chief Executive Kevin Rollins told analysts on a conference call that a lower tax rate added 1 cent per share to fourth-quarter earnings.

Wall Street on average was looking for earnings, excluding the charge, of 36 cents a share, according to Reuters Estimates. Forecasts were clustered in a tight range, from 36 cents to 38 cents.

Analysts had been looking for revenue of $13.55 billion, or year-over-year growth of 17.7 percent, according to Reuters Estimates.

Still, Dell posted record sales despite weaker consumer spending on its products in the latest quarter that spanned the annual holiday season.

But shares of Dell, based in Round Rock, Texas, fell 3 percent to $40.30 in after-hours trade on the Inet electronic brokerage from their Nasdaq close of $41.57.

ON TRACK FOR $80 BILLION

CEO Rollins said, however, the company was on track to generate $60 billion in revenue by year-end, and it set a new goal of delivering $80 billion in annual revenue over time.

"We are on track to hit about $60 billion a year earlier than expected," Rollins told reporters on the conference call. "We plan to grow the business to $80 billion in sales," he said.

Wall Street analysts have predicted the company could achieve $80 billion in revenue within three years. Rollins declined to spell out a time frame, saying the company would provide more details at an analyst meeting in April.

"We had a record quarter and we anticipate that the next quarter will be pretty similar," Rollins said. "We are very bullish on the marketplace...and setting a new trajectory toward an $80 billion goal. That's a pretty bullish vision."

For Dell's fiscal first quarter ending in April, the company said it expects a profit of 37 cents a share on $13.4 billion in revenue, with product shipments climbing 21 percent.

Analysts had been expecting a first-quarter profit of 36 cents a share on revenue of $13.5 billion.

"I don't think anything should be surprising," said Barry Jaruzelski, vice president of Booz Allen Hamilton's communications and technology practice, "They seem to be able to thrive irrespective of the overall environment."

(Additional reporting by Peter Henderson in Los Angeles and Mark McSherry in New York)