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Dell Q4 Earnings Fall Short; Shares Fall 4.89% After Hours

SANTA CLARA, CA - OCTOBER 19:  Dell chairman a...

Dell CEO Michael Dell

Stronger sales to businesses during the fourth quarter weren’t enough to help Dell offset a slump in sales to consumers and businesses, as the Round Rock, Texas-based company posted fourth-quarter earnings that fell short of expectations Tuesday.

Dell shares fell 4.89% in after-hours trading.

The PC maker posted net income of $764 million, or 43 cents a share, on sales of $16.03 billion; compared to net income of $927 million, or 48 cents a share, on sales of $15.69 billion during the year-ago period.

Excluding items, Dell earned $913 billion, or 51 cents a share. Analysts polled by Thomson Financial expected earnings of $958.84 million, or 52 cents per share.

On a conference call with reporters Tuesday Dell Chief Financial Officer Brian Gladden cited challenges securing a steady supply of hard-drives for higher-margin products in the wake of floods that devastated hard drive factories in Thailand that supply much of the world’s supply.

Dell said in a statement that it expects first quarter revenues to fall 7% from the prior quarter. Dell said it expects earnings per share, excluding items, of more than $2.13, for the 2013 fiscal year.

Dell Chief Executive Michael Dell has been slowly reshaping the company he founded, shifting into higher margin products and services targeting corporate data centers even as Dell continues cranking out PCs — a business HP flirted with dumping last year.

That mix makes Dell a particularly valuable barometer, since Dell competes with Apple in the high-end PC market, Asus and Acer in the mainstream PC market, HTC and Samsung in tablets and smartphones, IBM in the data center, and HP just about everywhere.

For the quarter, Dell posted:

  • $4.9 billion in large enterprise revenues, up 5% from the year-ago quarter;
  • $3.9 billion in sales to government agencies, down 1%
  • $4 billion in sales to small and medium businesses, up 6%;
  • and $3.2 billion in sales to consumers, down 2%.

Dell shares fell 89 cents, or 4.89%, to $17.32 in after-hours trading Tuesday.

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