Amid stiffening competition, computer maker Dell Inc. said Monday its fiscal first-quarter results will miss earnings targets, blaming the shortfall on “pricing decisions.”
The news sent Dell shares falling nearly 6 percent to a 52-week low.
The Round Rock, Texas-based company said it expects to earn 33 cents per share on revenue of about $14.2 billion, compared with analysts’ average estimate of 38 cents per share on revenue of $14.52 billion.
Dell, which sells computers directly to consumers and is the world’s largest PC maker, previously forecast a profit ranging from 36 cents to 38 cents per share, including stock-option costs of 3 cents, on revenue of $14.2 billion to $14.6 billion.
Dell said the shortfall from the previous guidance stems primarily from pricing decisions in the second half of the quarter that the company expects will accelerate revenue growth in the future.
During the quarter, Dell aggressively discounted some of its products as it lost ground to rivals.
In a statement, Dell CEO Kevin Rollins said the company had been “making investments in our support infrastructure and product quality” and slashing prices.
Company officials declined to comment further. Dell will report first-quarter earnings on May 18.
Stamford, Conn.-based market researcher Gartner Inc. said Dell saw its share of industry computer shipments decline to 16.5 percent in the first quarter of 2006 from 16.9 percent a year ago. Though Dell shipped 10.2 percent more PCs than it did in last year’s first quarter, Gartner said the growth rate was Dell’s slowest since the third quarter of 2001.
“We’re experiencing a slow down in the growth of the PC market, and prices are coming down,” said Samir Bhavnani, a PC industry analyst with market researcher Current Analysis. “And PC makers, with Dell especially as the biggest one, are paying for pricing decisions they made months ago.”