Dell warns, shares tumble

[notiCIas]

No. 1 PC maker says earnings will miss even pessimistic forecasts due to aggressive pricing, slowing sales.

July 21 2006: 8:11 AM EDT


NEW YORK (CNNMoney.com) -- Dell, the No. 1 maker of personal computers, warned Friday that it would miss Wall Street forecasts due to aggressive pricing in a slowing commercial market worldwide.

Dell (Charts) said it now expects earnings of 21 to 23 cents a share and $14 billion in revenue in the second quarter.


Analysts surveyed by earnings tracker First Call had a consensus EPS forecast of 32 cents, and a range of estimates from 27 to 34 cents. They also were looking for revenue of $14.2 billion.

Dell stock plunged about 14 percent to $19.03 in before-hours trading on Inet after the announcement.

Dell is holding its annual shareholder meeting Friday and is due to announce financial results for its second quarter on Aug. 17.

While the company's statement blamed the aggressive pricing for the earnings miss, the profit shortfall was far greater than the revenue problems.

The company said it increased spending on customer service and support capabilities. It said it is seeing positive results from that spending and will continue to invest there.

"All of our initiatives are focused on providing the best value, experience and products to customers every day, which will maximize shareholder value over the long term," Dell CEO Kevin Rollins said in a statement.

It also said it made significant investments in its products and expects to deliver a greatly expanded product line in the second half of the year.