Dells weak sales prediction sends its stocks down

Canada Standard Wednesday 22nd February, 2012

SAN FRANCISCO - Dell, the world's No.3 computer maker, has predicted weak sales for the current quarter triggering slump in its stocks that went down by over seven percent in pre-market trading Wednesday.

Dell said Tuesday that its sales would be down seven per cent this quarter from the previous quarter, when it had posted revenue of $16 billion.

Dell shares, which were at $18.36 Tuesday highest in the year so far, fell 7.5 per cent to $16.85 before the bell Wednesday.

The shares tumbled after Dell's chief financial officer Brian Gladden said profit margins for the quarter were hurt by a combination of weakness in US public spending

He also blamed the lingering impact of the Thailand flood on its products.

"We just didn't get the mix of drives that we wanted and it really forced us to sell less configured lower-end systems and prevented us from accessing higher margin more highly configured systems," Gladden said.

The official said that disruption in supply will continue probably into the third quarter.

It posted a net income slide of 18 per cent to $764 million down from $927 million a year earlier. The earnings have missed analysts' consensus of 52 cents by a penny.

Dell also stated its revenue would decline an additional seven per cent this quarter.