Dell Profit Declines on Modest Sales Gain
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Small-business and consumer sales led the way for Dell (NASDAQ: DELL), which saw fourth-quarter 2009 revenues rise by double digits over the same period last year, but lower margins from those increased consumer sales caused a slight dip in profits.
Sales for the quarter ended Jan. 29 were $14.9 billion, up 11 percent from $13.847 billion reported a year earlier. Net income totaled $334 million, or $0.18 per share -- a modest dip from the $351 million, or $0.19 per share, that Dell reported in the fourth quarter of 2008.
Dell's non-GAAP net income, which excludes one-time charges, would have been $0.28 per share.
Either way, Dell still beat expectations. A consensus of analysts surveyed by Thomson Reuters projected the PC maker to earn $0.27 per share on a non-GAAP basis on sales of $13.847 billion.
The emphasis on consumer products, which rose 29 percent compared to last year, hurt Dell's gross margins, since consumer products are more price sensitive and therefore are typically less profitable.
Revenue improved in all of Dell's business segments as the company, particularly services, which for the first time reported consolidated results with the former Perot Systems, which Dell acquired last November. Dell's IT services business rose 30 percent from a year ago while the hardware business rose 13 percent.
Product shipments increased 16 percent year-over-year and 11 percent sequentially from the third quarter. This was led by an 18 percent rise in Dell's Small and Medium Business unit and a 29 percent increase in its Consumer group. Notebook shipments, meanwhile, rose 32 percent year-over-year.
"Our solutions portfolio is expanding rapidly, driven by our strong capabilities, ongoing innovation and smart acquisitions. We continue to listen to and engage closely with customers through millions of conversations and interactions each day, enabling Dell to provide more relevant, value-oriented solutions to help meet their unique needs," Dell Chairman and CEO Michael Dell said in a statement.
Dell will host an earnings call with analysts this afternoon to discuss the earnings