Earnings: Dell | Sears

Fierce Competition Leaves Dell Missing Already-Reduced Forecasts

DALLAS - Dell (DELL) Inc.'s net income fell 18 percent in the first quarter, missing already-reduced forecasts, as the world's largest PC maker struggled with fierce competition from rivals who have gained ground on the company's direct-sales model.

In a related announcement, the company said it will begin using chips from Advanced Micro Devices Inc. (AMD) for the first time. The AMD Opteron Dual Core processors will be offered in Dell servers by year's end, marking a switch from using only chips from Intel Corp.

AMD shares soared more than 13 percent on the news.

Round Rock-based Dell earned $762 million, or 33 cents per share in the three months ended May 5, compared to $934 million, or 37 cents per share, in the year ago period.

That was short of Wall Street analysts, who were expecting 38 cents per share on revenue of $14.5 billion, according to a survey by Thomson Financial.

Last week Dell lowered its earnings projections for the quarter to 36 cents to 38 cents per share because of what it called "pricing issues."

"The competitive environment has been more intense than we had planned for or understood," Dell CEO Kevin Rollins said in a statement.

Dell, which grew into a Wall Street darling selling computers directly to businesses and consumers, said first-quarter sales rose 6 percent from the year ago period to $14.2 billion. It had previously forecast revenue of $14.2 billion to $14.6 billion.

In Thursday's report, Dell said it would no longer issue quarterly guidance and earnings per share and would instead only focus on long-term specific company and industry factors influencing performance.

Dell said it did not expect results for the second quarter to be similar to the first quarter.

The company's shares have taken a beating recently as rivals such as Hewlett-Packard Co. cut into Dell's share of the PC market.

Dell shares 3.6 percent, or 85 cents, in late-session trading on the news. Earlier, the stock rose 32 cents to close at $23.95 on the Nasdaq Stock Market. Dell shares have ranged from $23.60 to $41.99 in the past 52 weeks.

AMD shares rose $4.20, or 13.4 percent, to $35.55 in aftermarket trading, after rising 58 cents in the regular session.

Sears Holdings Reports Profit

HOFFMAN ESTATES, Ill. - (AP) - Sears Holdings Corp. (SHLD), the retailing company formed last year when Kmart bought Sears, on Thursday reported a profit for the first quarter versus a loss a year ago that were hurt by a charge.

The company credited its growth to improved profitability at both its Kmart and Sears Domestic chains due to reduced expenses.

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For the quarter ended April 29, Sears earned $180 million, or $1.14 per share, versus a loss of $9 million, or 7 cents per share, during the same period last year. The year-ago loss included a $90 million charge due to an accounting change for certain costs. Excluding that change, Sears would have reported earnings of $81 million, or 65 cents per share in the year-ago period.

Analysts, on average, predicted a profit of 65 cents per share in the latest quarter, according to a Thomson Financial poll.

Sears shares jumped $11.52, or 8.4 percent, to $149.48 in premarket trading.

Revenue jumped 57 percent to $12 billion from $7.63 billion last year. The year-ago revenue total included only about five weeks of both contributions from the Sears stores acquired by Kmart in late March 2005.

Sales in stores open at least one year, a widely used industry gauge known as same-store sales, declined 4.8 percent domestically. Same-store sales fell 8.4 percent at Sears Domestic, due to sales drops in all categories except home appliances, the company said.

Same-stores sales slipped 0.2 percent at Kmart due to lower transaction volume from home goods, partially offset by higher apparel and food sales.

Sears Holdings was formed when Kmart Holding Corp. acquired Sears, Roebuck and Co. on March 24, 2005.

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