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|21st February 2013, 09:47||#1|
Join Date: May 2010
Dell profit slumps
Dell has revealed to shareholders why its moves to go private at a slightly reduced share price might have been a good plan for them.
Dell reported a 31 percent drop in profit, which has been caused by a shrinking consumer business. The news could not have come at a better time for Michael Dell who is trying to convince shareholders to accept $13.65 a share to buy out the company.
Some shareholders think that price is too low, although after the announcement of falling profits, Dell's share price is sitting at $13.80.
Analysts have also warned that things will get much worse for Dell before they get better. Most are saying that Dell's rapidly shrinking business and dismal prospects in a declining PC market may make the buyout more attractive.
Sales across every business line, except servers and networking, declined in the fiscal fourth quarter. Revenue from servers and networking climbed 18 percent, driven by its datacenter business and revenue from recently acquired companies such as Quest Software and Sonic Wall. But generally revenue slid 11 percent.
According to the Times of India, Dell posted net income of $530 million in its fiscal fourth quarter on revenue of $14.3 billion. That came in slightly higher than analysts expected.
Dell refused to give a financial forecast for fiscal 2014 or the fiscal first quarter, citing the proposed buyout.
So far, shareholders representing almost 14 percent of Dell shares not held by Michael Dell have now said they will vote against the deal. Others have said that if Dell offered them $15 per share they would agree.
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