ROUND ROCK (dpa-AFX) - PC maker Dell Inc. (DELL) said Tuesday after the markets closed that its first quarter profit fell 33% from last year, as revenue declined and margins deteriorated amid slow consumer demand.
The company's quarterly earnings per share, excluding items, also came in below analysts' expectations as did its quarterly revenue. At the same time, the Round Rock, Texas-based company gave a downbeat revenue outlook for the second quarter.
Dell shares are currently losing 12.14% in after hours trading after closing the day's regular trading session at $15.08, up 11 cents. The shares trade in a 52-week range of $13.29 to $18.36.
Lower revenue and weaker margins weighed heavily on Dell's earnings. Gross margin for the quarter narrowed to 21.3% from 22.9% a year earlier, while operating margin shrank to 5.7% from 8.1% last year.
Regionwise, the company's Amercas revenue fell 7% year-over-year in the first quarter, while Europe, Middle East and Africa revenue declined 1%. Asia-Pacific and Japan revenue was flat but China revenue increased 9%. Revenue from the so called emerging markets - Brazil, Russia, India and China - grew 4%.
The company's desktop PC revenue for the first quarter declined 1% to $3.27 billion, while its mobility revenue, which includes laptop PCs, dropped 10% to $4.24 billion.
Worldwide PC shipments rose 1.9% to 89.0 million units in the first quarter of 2012 from 87.3 million units in the first quarter of 2011, according to preliminary results released by market research firm Gartner, Inc. (IT) last month. Gartner had earlier projected first quarter 2012 worldwide PC shipments to decline 1.2% from a year earlier.
In the third quarter of 2011, China's Lenovo overtook Dell to become the world's second largest PC vendor for the first time and continues to maintain that position. Dell had lost the global PC lead to Hewlett-Packard Co. (HPQ) in 2006.
Dell's software and peripherals revenue for the first quarter fell 7% from last year, while server and networking revenue for the quarter grew 2%.
Dell is the world's third largest maker of server computers behind International Business Machines Corp. (IBM) and HP.
Services revenue for the first quarter increased 4% year-over-year, boosted by the acquisition of Perot Systems, while storage revenue fell 8% from a year earlier.
For the first quarter, large enterprise revenue fell 3% year-over-year, while public revenue declined 4%. Small and medium business revenue for the quarter grew 4%, while consumer revenue dropped 12%.
Dell was among the worst sufferers among the technology giants during the recession In order to drive growth, Dell resorted to acquisitions, cut thousands of jobs, closed plants and entered the smartphone market.
Of late, Dell is acquiring or has signed deals to acquire small companies to expand its business. After losing the takeover battle for data storage firm 3PAR Inc. to larger rival HP, Dell acquired Compellent Technologies, Inc. last year. In August 2011, Dell completed its acquisition of security software maker Force10 Networks.
In 2012, Dell has completed the acquisitions of AppAssure, Clerity Solutions and SonicWALL, Inc. The company has also signed deals to buy Make Technologies, Wyse Technology Inc. and Wyse Technology.
For the first quarter ended May 4, 2012, Dell reported net income of $635 million or $0.36 per share, compared to $945 million or $0.49 per share for the year-ago quarter.
Excluding items, adjusted net income for the first quarter fell to $761 million or $0.43 per share from $1.05 billion or $0.55 per share in the prior year quarter.
On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.46 per share for the first quarter. Analysts' estimates typically exclude special items.
Revenue for the first quarter fell 4% $14.42 billion from $15.02 billion in the same quarter last year. Fourth quarter revenue fell 10% sequentially. Twenty-five analysts had a consensus revenue estimate of $14.91 billion for the first quarter.
Looking forward, the company said it expects second quarter revenue to be in line with historical seasonal trends and be up 2% to 4% sequentially, which implies revenue of $14.71 billion to $15.00 billion. Analysts currently expect the company to post revenue of $15.42 billion for the second quarter.
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