Dell in the doldrums over Q4 revenue

Dell reported revenue of $14.4bn, sharply below Wall Street's already reduced estimates of $14.9bn, for its fourth fiscal quarter ending 2 February. Profits were actually a bit higher than expected, coming in at 30 cents per share, compared with reduced expectations of 29 cents per share.

Dell had warned investors fourth-quarter revenue and profits would fall short of expectations when it announced the resignation of former CEO Kevin Rollins in January. Analysts surveyed by Thomson First Call had originally been expecting revenue of $15.3bn and profits per share of 32 cents.

Compared with last year's fourth quarter, revenue was down 5.3 per cent from $15.2bn, and profits per share were down 30 per cent from 43 cents per share. These results are only considered preliminary - they are subject to change pending the outcome of internal and external investigations into the company's accounting practices, and they're unlikely to change for the better.

The investigations involve "certain accounting and financial reporting matters, including issues related to reserves and other balance sheet items", Dell said in a filing with the Securities and Exchange Commission (SEC). A Dell spokesman declined to comment further on the specifics of the investigation other than to note the PC maker is complying with the SEC and conducting its own "thorough" investigation of the matter.

Dell executives maintained their silence in reporting the poor results, declining to hold a conference call with the financial analyst community. The company does not plan to hold a conference call related to its profits until the investigation into its accounting practices is completed, the spokesman said.

Dell took an $89m charge to pay for costs associated with the investigations during the quarter, the company said. This negatively affected profits per share by 3 cents.

In its profits press release, the company chose to highlight its growth outside the US and its server market growth. International unit shipments reached an all-time high, and revenue from international shipments now makes up 46 per cent of Dell's total revenue. Server revenue inched up two per cent from $1.4bn last year to $1.5bn this year.

But the numbers reported by Dell's core PC business were not good. Revenue from mobility products - essentially laptops - dropped two per cent on only a two per cent increase in unit shipments. Desktop sales were even worse, with unit shipments declining 18 per cent and revenue declining 17 per cent. Stephen Baker, an analyst with The NPD Group, said: "Those numbers suggest to me that there's not a demand issue anywhere but Dell."

In an ironic twist, Dell's poor performance helped boost its income. The company did not pay out $184m in employee bonuses because it failed to meet its goals for the year, adding 6 cents to its profits per share for the quarter.

Tom Krazit writes for CNET News.com