Dell slashes its revenue forecasts

City A.M. Reporter
DELL slashed its 2012 revenue forecast as the outlook for technology spending this year weakened, sending its shares more than seven per cent lower.

The personal computer maker yesterday lowered its estimate for full-year revenue growth to just one to five per cent, from five to nine per cent previously, adding that sales this quarter would likely stay flat.

Shares slid 7.3 per cent to $14.65 after hours, from a close of $15.80 on the Nasdaq.

The world’s number two PC maker, which in May said it anticipated strong government spending and a good back-to-school season, recorded sales of just under $15.7bn (£9.5bn) in its fiscal second quarter ended July.

Dell posted net income of about $890m, or 48 cents a share, in the quarter ended July, versus $545m, or 28 cents a share, a year earlier. Excluding certain items, it earned 54 cents a share.

“From a market standpoint, clearly there’s a different demand dynamic as you think about revenue growth,” Dell chief financial officer Brian Gladden said. “It’s a bit of an uncertain environment.”

Industry executives warn that corporate and government spending may have begun to wane on fears of a second-half economic growth slowdown, while a high jobless rate pressures consumer income.

But during its annual analysts’ day in June, Dell executives pledged to maintain its pace of acquisitions – having completed its $960m purchase of Compellent in February – to gain access to corporate clients, and safeguard margins.