Dell revenue falling below expectations, share value drops

Dell have forecast fiscal first quarter revenue below Wall Street's expectations which is causing concern that the PC industry has not fully emerged from the downturn. The company shares have dropped by 4 percent.

Dell are ranked number 3 in the world in the personal computer sector and they have said that sales would be down by 7 percent this quarter from the previous quarter, when it posted revenue of $16 billion. This means that Dell will post a revenue of around $14.9 billion, below the forecast of $15.2 billion.

Chief Financial Officer Brian Gladden said profit margins have been damaged by a combination of weakness in U.S. Public spending and the ‘lingering impact' of the Thailand flood on its product mix.

He said “We just didn't get the mix of drives that we wanted and it really forced us to sell less configured lower-end systems and prevented us from accessing higher margin more highly configured systems.”

He added that he expected the hard drive issues to continue throughout 2012.

ISI Group analyst Brian Marshall said “It's going to take a little bit of time for Dell to turn around the tanker ship. They have $65 billion revenue and it takes a long time to move the needle to more strategically relevant revenue sources and we are just not seeing signs of progress yet.”

Kitguru says: It is a tough market for a PC maker in 2012.

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