Dell 2Q profit drops 17 percent and stock plunges (AP)
By JESSICA MINTZ, AP Technology Writer 10 minutes ago
Computer maker Dell Inc. said Thursday its fiscal second-quarter profit fell 17 percent, hurt in part by lower prices and restructuring charges. The earnings were short of Wall Street estimates, and Dell shares plunged.
For the three-month period that ended Aug. 1, Dell's earnings dropped to $616 million, or 31 cents per share, from $746 million, or 32 cents per share in the same period last year.
Excluding amortization and business realignment charges, Dell said it would have earned 33 cents per share. Analysts surveyed by Thomson Reuters had forecast a profit of 36 cents per share.
Investors sent Dell shares down $2.54, or 10 percent, to $22.67 in after-hours trading. Earlier, the stock dropped 42 cents to close at $25.21.
Dell said lower PC prices cut into earnings. In a conference call, Chief Financial Officer Brian Gladden said Dell made "strategic pricing" changes in Europe, the Middle East and Africa to speed up growth. The company also deferred some profits from that region to a later quarter.
Gladden also indicated that as Dell's presence in retail stores grows, the company is taking aim at back-to-school shoppers with lower prices.
Dell said that operating expenses fell to their lowest point in six quarters, and that the company would reach its goal of 8,900 jobs cut in the current third quarter. Since the target was set last year, Dell has already cut more than 8,500 workers.
Sales rose 11 percent to $16.4 billion, ahead of Wall Street's view for $15.9 billion in sales.