BOSTON – Dell Inc. (DELL) shares tumbled 9.4 percent Tuesday after the world's biggest PC maker cut its third-quarter revenue forecast, blaming disappointing sales to consumers in the United States and Britain.
The warning follows on the heels of a disappointing second quarter, when Dell's (search) revenue missed analysts' forecasts after the company cut prices aggressively on entry-level PCs in the United States.
Now Dell is struggling to raise prices without losing business from customers looking for big values.
"They're in the wrong place," said Tim Ghriskey, chief investment officer of Solaris Asset Management (search), which manages about $850 million. "Once a consumer gets the feeling that you're a low-end seller, it's tough to move back to the right place."
After regular stock trading ended on Monday, the company said it expects to report third-quarter revenue of $13.9 billion — below its earlier forecast of $14.1 billion to $14.5 billion, and below analysts' $14.3 billion estimate.
Dell also said it expects fiscal 2006 third-quarter profit before charges of 39 cents, missing analysts' average forecast of 40 cents per share, according to Reuters Estimates.
The company also plans to take a third-quarter charge of about $450 million, or about 14 cents per share, for the cost of repairing some customers' computer systems as well as for expenses related to cutting jobs and restructuring units.
That will cut earnings per share for the quarter that ended in October to 25 cents.
The company, based in Round Rock, Texas (search), disclosed the projected shortfall in a press release. It didn't hold a conference call to elaborate on that statement.
Dell will release fiscal 2006 third-quarter financial results on Nov. 10.
Dell shares fell $2.98, or 9.4 percent, to $28.90 in midday trading on Nasdaq. Earlier, the shares dropped to $28.81, their lowest in 2 1/2 years.