Dell Inc. forecast disappointing second-quarter revenue as U.S. and European corporate tech-spending weakens and consumer personal computer sales continue to shrink, hammering its shares.
Shares in the company, like rival Hewlett-Packard Co. which is losing market share to mobile devices such as Apple Inc.’s iPad, dived more than 9 per cent in after hours trade.
The world’s No. 3 PC maker forecast a 2- to 4-per-cent revenue gain this fiscal quarter, to $14.7-billion to $15-billion (U.S.), well short of the $15.4-billion Wall Street had been expecting.
“Clearly we are seeing a bit more challenging demand environment,” Dell chief financial officer Brian Gladden said in an interview. “Europe, in general, was down for us.”
Demand from U.S. federal businesses appears to be improving slightly, he noted. “We are seeing a pretty good pipeline there.”
Dell’s quarterly revenue fell more than analysts had expected, hurt by weak sales to consumers, large enterprises and government units. PC makers have struggled with slowing demand as mobile devices such as the iPad erode market share.
Sales to consumers took a big hit, with consumer revenue slipping 12 per cent to $3-billion. Sales to large corporations declined 3 per cent to $4.4-billion.
Dell said revenue in its fiscal first quarter declined 4 per cent to $14.4-billion, below the average analyst estimate of $14.9-billion according to Thomson Reuters I/B/E/S.
Excluding one-time items, the company earned 43 cents, less than the average Wall Street estimate of 46 cents.
Net income fell to $635-million, or 36 cents a share, from $945-million, or 49 cents a share, a year earlier.
Dell’s shares traded at $13.50 after hours, down from a $15.08 close on Nasdaq.