by CIO Staff

Dell Cuts Profit Outlook

May 09, 20062 mins

On Monday, Round Rock, Texas-based Dell, the world’s largest producer of personal computers by market share, announced that its first-quarter profits will not meet earnings forecasts due to “pricing decisions” made in the second half of 2006’s first quarter, the Associated Press reports via the Chicago Tribune.

Dell plans to take in 33 cents per share on revenue of roughly $14.2 billion, compared to previous analysts’ estimates of 38 cents per share on revenue of $14.52 billion, according to the AP.

The company had predicted profits between 36 and 38 cents per share, including 3-cent-per-share stock option costs, on revenue between $14.2 billion and $14.6 billion, the AP reports.

Dell attributed the expected earnings miss to decisions made regarding pricing during the second half of the first quarter, which the company expects will lead to increased revenue growth in future quarters, according to the AP.

After-hours trading on Monday saw Dell’s shares drop almost 6 percent, the AP reports.

The news came on the same day Dell said it plans to bump up purchases from Taiwan by 20 percent in 2006, totaling more than $12 billion worth of goods, the AP reports via the Houston Chronicle.

Kevin Rollins, Dell’s chief executive, said that increase is due largely to global production development and increasing sales, according to the AP.

For related news coverage, read Apple Slowly Eclipses Dell in Co. Value.

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