Amid Dell’s ownership battle, declining PC sales took a big bite out of its profits
The numbers: Not good. PC maker Dell reported earnings per share of $0.21, which missed estimates, and net income fell by 79% to $130 million. But it reported better-than-expected revenue at $14.1 billion.
The takeaway: Dell’s earnings are being scrutinized more than usual because it is in the middle of a deal fight, but news about its results leaked earlier this week. So its shares were already depressed and fell only slightly further in after hours trading. In February, Dell agreed to a buyout offer from a group that includes CEO and founder Michael Dell, private equity firm Silver Lake, and Microsoft, for $13.65 a share. But some shareholders have objected to the price, and now the company has a rival offer from activist investor Carl Icahn and Southeastern Asset Management, two of Dell’s largest outside shareholders.
What’s interesting: While Dell’s PC unit, not surprisingly, posted a 9% decrease in revenue, its enterprise division (geared towards large corporate clients) saw a 10% increase in sales. But most of Dell’s revenue still comes from the PC business, and the shift to mobile and tablets is hurting it. That also bolsters Michael Dell’s case for taking the company private.
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