Dell Meets Lowered Expectations

Dell met lowered expectations with its quarterly results late Thursday, but the company’s biggest news was for AMD and Intel .

Dell announced that it will use AMD chips in its high-end servers, the first time Dell has used AMD chips. The announcement sent AMD shares soaring 15% in after-hours trading, while Intel shares shed 4% to a new 52-week low.

Dell shares rose 4% after the company reported earnings of 33 cents a share on sales of $14.22 billion. The company’s revenues were just ahead of its lowered guidance provided last week, while earnings were in line.

Dell’s revenues were up 6.2% from the year-ago quarter, driven by 28% growth in services revenue and 12% growth in mobility and storage sales. Sales outside the U.S. were up 12% and accounted for 44% of revenues.

The company declined to issue formal guidance, but said it expects July quarter growth to be flat sequentially, which could potentially come in shy of Wall Street’s 34-cent and $14.34 billion estimates.

“The competitive environment has been more intense than we had planned for or understood,” CEO Kevin Rollins said in a statement. “Over the last year, we tried to achieve both growth and increased levels of profitability, which allowed our competitors to improve their relatively low levels of profitability and accelerate their growth. We have now taken action to reignite our growth and reassert the unique value of our Direct Model. We are re-establishing our price position, investing in customer sales, service and support, building our product and technology leadership and improving our cost structure and productivity. All of these actions will enable Dell to optimize the significant potential we have for global growth at a time when we expect our industry to undergo significant change and consolidation.”

Dell announced plans to invest “more than $100 million to regain its leadership position in customer experience.” It will hire more than 2,000 new sales and support personnel, add or expand call centers in Ottawa, Oklahoma City, Manila and Nashville, and open new manufacturing and design and development facilities.

On the company’s conference call, analysts were skeptical of Dell’s ability to return to its former margins and growth rate. One even asked if Dell would consider an indirect sales model, which the company rejected.

The broader market fell once again Thursday after Federal Reserve officials made hawkish comments on interest rates.

The Nasdaq fell 15 to 2180, the S&P 500 lost 8 to 1261, and the Dow fell 77 to 11,128. Volume declined to 2.45 billion shares on the NYSE, and 2.02 billion on the Nasdaq. Decliners led 20-12 on the NYSE, and 19-11 on the Nasdaq. Downside volume was 74% on the NYSE, and 62% on the Nasdaq. New highs-new lows were 18-152 on the NYSE, and 64-111 on the Nasdaq.

BEA soared 12% after beating estimates, while Shanda and Intuit rose on their earnings reports.

Napster and fell on their results.

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