Dell warned on Monday that its quarterly earnings would be lower than expected, a result of price cuts aimed at stemming the decline in its market share for personal computers.
The company now expects to earn US$0.33 a share, including US$0.03 a share in stock option expenses, in the quarter ended April 30, down from a forecast almost three months ago of US$0.36 to US$0.38 a share. It also said on Monday that revenue would be about US$14.2 billion, at the low end of its previous forecast of 6 percent to 8 percent growth.
Though Wall Street analysts saw that Dell was struggling, the degree to which earnings were affected by price cuts took investors by surprise. Dell's shares fell 6.02 percent in after-hours trading, to US$24.84, the lowest level in more than three years.
The company gave few details of what went wrong in the period, its first fiscal quarter, other than to suggest the effects of aggressive price cutting in the latter half of the quarter meant to drive future sales growth.
A statement quoted Kevin Rollins, Dell's chief executive, as saying, "During the first quarter, we continued to execute on our strategy to reinvigorate growth by making investments in our support infrastructure and product quality and by accelerating pricing adjustments."
The company will report its earnings on May 18.
"There were signs that Dell was getting more aggressive," said A.M. Sacconaghi, senior research analyst at Sanford Bernstein.
Dell's problem is one it has been struggling to solve for almost a year. While it tries to maintain the growth in computer sales that its investors have come to expect, it has had to cut prices and trim profit margins. When it tries to improve those margins to please Wall Street, it loses market share. The strategy that worked so well in the past -- cut prices and dare the other PC makers to follow -- does not seem to be working as well.
The problem is most obvious in the market share data. Gartner, the market research firm, said that in the first quarter, Dell lost market share for the first time since Gartner began tracking PC data in 1989. Charles Smulders, a Gartner analyst, said Dell's worldwide PC market share slipped to 16.5 percent in the first quarter from 16.9 percent in the same period a year earlier.
But the real damage was in the US, where market share slipped to 29.9 percent in the quarter from 32 percent a year earlier, according to Gartner. While the overall market grew 7.3 percent, Dell's sales grew only about 2 percent, Smulders said.
Dell is, however, still the world's largest PC maker.
Sacconaghi estimated that operating profit margins slipped to 7.3 percent from 8.2 percent the previous quarter.
"Historically, they have been stable," he said.
Hewlett-Packard has, meanwhile, gained market share worldwide and in the US. Hewlett has been able to cut its costs in the last year, starting to diminish one of Dell's historic advantages.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)
RESTAURANT POISONING? Deputy Minister of Health and Welfare Victor Wang at a press conference last night said this was the first time bongkrekic acid was detected in Taiwan An autopsy discovered bongkrekic acid in a specimen collected from a person who died from food poisoning after dining at the Malaysian restaurant chain Polam Kopitiam, the Ministry of Health and Welfare said at a news conference last night. It was the first time bongkrekic acid was detected in Taiwan, Deputy Minister of Health and Welfare Victor Wang (王必勝) said. The testing conducted by forensic specialists at National Taiwan University was facilitated after a hospital voluntarily offered standard samples it had in stock that are required to test for bongkrekic acid, he said. Wang told the news conference that testing would continue despite