Dell Earnings Fall on Weak Corporate Spending

No. 1 personal computer maker Dell Computer Corp. Thursday said fiscal fourth-quarter earnings fell slightly as stronger-than-expected consumer demand for PCs failed to offset weak corporate spending on technology.

Dell also said it expects to outperform the industry in its current fiscal first quarter, when Dell expects industry-wide shipments to drop 10 percent from the fourth quarter.

Dell, however, expects its first-quarter unit volumes and revenue to decline by 3 percent to 5 percent from the fourth quarter and sees first-quarter earnings of 16 cents per share.

Based on Dell's fourth-quarter's reve Analyst estimates are for first-quarter earnings of 16 cents per share on revenue of $7.6 billion, according to research firm Thomson Financial/First Call.

Dell's shares rose to $26.85 in after-hours trade, up slightly from its close at $26.81 on the Nasdaq.

Dell said it earned $456 million, or 17 cents per share, in the quarter ended Feb. 1, down from $508 million, or 18 cents per share, in the year-ago period, excluding charges.

Dell said net income actually increased to $456 million, or 17 cents per share, from $434 million or 16 cents per share in the year earlier quarter, which includes a $105 million charge for job reductions.

The company in mid-January had raised its fourth-quarter guidance to earnings of 17 cents per share from 16 cents per share.

For the fourth quarter, Dell reported revenues fell to $8.06 billion from $8.67 billion in the year-ago quarter. Dell had told analysts last month to expect revenue of $8 billion.

Dell's outlook is in line with what other technology companies have been saying about the first quarter. PC and printer maker Hewlett-Packard Co. , for instance, said on Wednesday that it expects its current quarter revenue to fall modestly.

The PC industry had a tough year in 2001, with PC demand among consumers and corporations in a slump that worsened as the economic downturn took hold. During that time, Dell has lead an aggressive price war that helped it win substantial market share.

Consumer demand in the fourth quarter was stronger than many PC makers had expected, however, causing Dell competitors like Compaq Computer Corp. and Hewlett-Packard, which plan to merge, to surpass their initial earnings and revenue expectations.

Dell shares have gained 51 percent since the end of 2000, outperforming the American Stock Exchange Computer Hardware index, which has fallen 30 percent during that period. Dell on Thursday lost 3.4 percent, or 94 cents, closing at $26.40 on Nasdaq.