Dell beats earnings mark despite sinking profits

Dell has reported fourth quarter profits of $673m (£337m), down sharply from the $1bn it reported for the same period last year.


Dell has reported fourth quarter profits of $673m (£337m), down sharply from the $1bn it reported for the same period last year.

The company, which is still coping with the aftermath of the resignation of its chief executive in January and an ongoing investigation of its accounting practices, had fourth quarter turnover of $14.4bn. This was below analysts' expectation of $14.88bn and the $15.2bn Dell collected for the same period last year.

Dell saw a major change in sales patterns, as the fourth quarter marked the first time in company history that Dell shipped more computers to customers outside the US than to domestic addresses.

In another trend, Dell's revenue dropped for desktops (down 18 percent by units year over year) and notebooks (down two percent by units), its two biggest product sectors. The company made up some of the deficit with a rise in revenue from the server, storage and services divisions.

For the third consecutive quarter, Dell filed its numbers as preliminary results, not as the official Form 10-Q that every publicly traded US company is required to submit to the SEC. Dell blamed the delay on the accounting investigations accounting investigations by the U.S. Securities and Exchange Commission and the US Attorney for the Southern District of New York.

The missing forms could also have pushed Dell closer to being delisted by the Nasdaq stock exchange, which had demanded the forms by 14 March. Dell, however, said a Nasdaq review council had now granted it a reprieve, delaying further action until another hearing on May 4.

Although this was the first earnings report since Michael Dell replaced Kevin Rollins as CEO in January, company executives did not hold a customary conference call with analysts. Dell also failed to sum up its quarterly earnings in a full annual report, saying that the preliminary results for its past three quarters may change if the company is forced to restate earnings as a result of the investigations.

In a statement, Michael Dell said he was so disappointed with the results that he had withheld some of the employee bonuses, a savings that added $184 million to the company's operating income this quarter. That gain was offset, however, by $89 million the company spent in handling the accounting investigations.

Dell's legal struggles may put an even deeper dent in company books in the long run. In a filing to the SEC on this week, the company dismissed the claims as the cost of doing business, but warned that potential settlements or court awards could hurt its bottom line.

"Dell is involved in various claims, suits, investigations and legal proceedings that arise from time to time in the ordinary course of its business," the SEC filing reads. "The company could in the future incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period."

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