Dell projects sales that fall short of estimates

Dell Technologies Inc on Monday projected revenue in the current quarter that fell short of analysts’ estimates, saying economic uncertainty has begun to affect information technology customers.

“Sales will be as much as $24 billion in the quarter ending in January,’’ chief financial officer Tom Sweet said in a conference call. Analysts, on average, projected $24.9 billion.

Profit, excluding some items, will be $1.50 to $1.80 a share, compared with analysts’ average estimate of $1.61.

“Forecasting for the upcoming fiscal year is difficult as economic uncertainty is dampening IT spending intentions,’’ Sweet said on the call. “Some customers have paused purchases in the near term.”

The disappointing forecast came after Dell had reported stronger-thanexpected sales and profit in the fiscal third quarter.

Sales slipped 6% to $24.7 billion in the period ending Oct 28, the Round Rock, Texas-based company said in a statement. Profit, excluding some items, was $2.30 a share, compared with analysts’ average estimate of $1.60.

Dell combated slower demand and drove record profitability in the quarter, co-chief operating officer Chuck Whitten said. “We anticipated the changing landscape and responded quickly.”

Dell also managed its supply chain by reducing its backlog, which also helped boost results, said co-COO Jeff Clarke.

The sales decline was due to an ongoing slump in demand for personal computers, which generate about 55% of Dell’s total revenue.

That segment slipped 17% in the fiscal third quarter, in line with estimates, led by a 29% plunge in consumer sales.

The shares, which had increased as much as 8.8% after the results were announced, gave back all of the gains, falling about 2% in extended trading after the forecast. The stock closed at $41.07 in New York and has declined 27% this year.

Dell isn’t alone in seeing falling computer demand.

Global PC shipments dropped more than 19% in the third quarter, according to Gartner Inc, the steepest decline since the industry analyst began tracking the metric in the mid-1990s.

As economic and political uncertainty has made companies more selective with information technology spending, computer upgrades haven’t been high priorities, wrote Mikako Kitagawa, a Gartner analyst.

Meanwhile sales from Dell’s Infrastructure Solutions Group, which includes its technology services, increased 12% to $9.6 billion from a year earlier.

Server and networking sales climbed 14% to $5.2 billion, while storage revenue gained 11% to $4.4 billion.