Dell misses Q2 revenue expectations on lower prices

Dell Inc. continued to run a very profitable business, at least for the PC industry, in its most recent operating period. However, the company fell short of analyst estimates for second-quarter revenue, citing a decrease in average selling prices, Dell announced Thursday.

Second-quarter revenue was US$13.4 billion, up 15 percent from revenue of $11.7 billion last year but lower than analyst estimates of $13.7 billion in revenue, as polled by Thomson First Call.

Dell had lower average selling prices during the quarter than it had hoped for, said Kevin Rollins, Dell’s chief executive officer, in a press release Thursday. The company focused on profitability to hit its earnings per share guidance, he said.

Net income, according to generally accepted accounting principles, was $1.02 billion, up 28 percent from net income of $799 million in last year’s second quarter. This works out to earnings per share of $0.41, but that figure includes a tax benefit of $0.03 per share related to a previously disclosed tax benefit from the repatriation of earnings allowed by the American Jobs Creation Act of 2004.

Without the tax benefit, earnings per share were $0.38, in line with the estimates of analysts surveyed by Thomson First Call.

Despite the lower-than-expected revenue, Dell’s shipment totals grew faster than the rest of the industry, Rollins said. The company believes it grew its market share by 3 percent in server shipments. It also grew its revenue outside the U.S., its traditional stronghold, by 24 percent during the quarter.

Dell executives will hold a conference call later on Thursday to discuss the company’s results.

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