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Dell beats expectations despite profit slump
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- Published on Tuesday, 19 February 2013 16:42
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Reuters
Founder and CEO Michael Dell was not on the company’s earnings call on Tuesday afternoon to discuss the results, with the company citing his involvement in the pending deal. Dell executives said they would not discuss the deal on the call.
The stock was trading up a fraction after hours, about 2% above the $13.65 offer price.
For the quarter ended Feb. 1, Dell reported net income of $530 million, or 30 cents per share, compared with net income of $764 million, or 43 cents per share, for the same period last year.
Adjusted earnings came in at $702 million, or 40 cents a share. Revenue slipped 11% to $14.3 billion. Analysts were expecting earnings of 39 cents a share on revenue of $14.1 billion, according to consensus estimates from FactSet.
In a statement, Chief Financial Officer Brian Gladden the company “continued to execute our long-term strategy.” Dell is pushing to de-emphasize its low-margin businesses, led by PCs, in a bid to expand its presence in the more profitable segments of the corporate IT markets.
Dell earnings leave buyout questions unanswered
Dell posts results that beat Wall Street's expectations, even as the Texas company reports a double-digit drop in revenue from its PC and mobility segments. MarketWatch's Dan Gallagher reports. (Photo: Getty Images)
The company did not provide an outlook for its fiscal year or for the first quarter because of the pending buyout agreement. The company’s plan to go private in a deal led by Chief Executive Michael Dell and Silver Lake, a private equity firm, has been opposed by some major shareholders who claim the price is too low.
ISI Group analyst Brian Marshall noted the company’s strong numbers.
“It has been about two-and-a-half years since Dell beat both the Street’s top and bottom line estimates,” he told MarketWatch.
Sterne Agee’s Shaw Wu also said the results were solid, relative to analysts’ low expectations. “But investor focus will be on how the buyout group reacts to shareholders, who believe the price is too low,” he told MarketWatch.
The company’s biggest institutional shareholder, Southeastern Asset Management, is pushing for a buyout price of $24. The Dell deal is offering $13.65 a share.
Marshall of ISI Group said the results appear to be “not enough to move the needle either way” in terms of changing investor attitude toward the proposed buyout.
Topeka Capital’s Brian White also said the company kept the report “neutral enough,” adding that it made sense for Michael Dell to not be on the earnings call.
“It shows that they’re unbiased in the discussion,” he told MarketWatch. “It’s the appropriate, legal way.”
US : U.S.: Nasdaq
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Feb. 19, 2013 4:00p
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Benjamin Pimentel is a MarketWatch reporter based in San Francisco. Follow him on Twitter @BenPimentel. Dan Gallagher is MarketWatch's technology editor, based in San Francisco. Follow him on Twitter @MWDanGallagher.
