DELL just warned:

Discussion in 'Stocks' started by capmac, Oct 31, 2005.

  1. capmac

    capmac

    DELL Dell cuts guidance, will take $450 mln charge, look to streamline business

    Co issues downside guidance for Q3 (Oct), sees non-GAAP EPS of $0.39 vs. $0.40 Reuters Estimates consensus; sees Q3 (Oct) revs of approx $13.9 bln vs. 14.3 bln consensus. Co comments "shortfall in revenue versus previous guidance was driven in part by the company's U.S. consumer and U.K. businesses, which fell short of expectations. The company continues to refocus on higher value products and services while optimizing profitability". Co also says it will take a Q3 charge of approx $450 mln, more than $300 mln of shich is associated with "cost of servicing systems that included a vendor part that failed to perform to Dell's specifications. This issue is limited to a small percentage of previous generation OptiPlex desktop systems". Charge also includes costs of workforce realignment, product rationalizations and excess facilities, actions are designed to streamline the business to improve operating efficiency.
     
    #1     Oct 31, 2005
    Share
  2. Star

    Star

    #2     Oct 31, 2005
    Share
  3. loufah

    loufah

    I'm surprised at how much this is hitting the S&P 500. The change in SPY from 16:06:59 to now is -3.15%, but QQQQ's only down 4.12%. I'd expect the techs to be down a lot more than the broader market. Maybe MSFT (down 5%) is dragging down the S&P. DELL is down 5.37%.
     
    #3     Oct 31, 2005
    Share
  4. uninvited_guest

    uninvited_guest

    #4     Oct 31, 2005
    Share
  5. Rickshaw Man

    Rickshaw Man

    The waited for month end to pass then drop a bomb, looks like alot has been priced in.
     
    #5     Nov 1, 2005
    Share
  6. nitro

    nitro

    Here is my analysis of the DELL situation:

    Look at the trend towards cheap powerful but low margin computers they were offering. Almost everyone in the home market migrated towards that, hurting earnings. In an effort to try to lure customers into higher margin computers they came out with the XPS systems.

    But here is where the double whammy came in. Dell has been superslow in adopting AMD processors. That means that home gamers are going for the more heat/per performance efficient AMDs, and the Server market customers are going to the more scalable AMDs.

    In conclusion, imo DELL has ignored an important part of the market by continuing to use INTC processors and their earnings is reflecting that decision.

    nitro
     
    #6     Nov 1, 2005
    Share