Transcripts

Dell Sounds A Warning Bell

SUSIE GHARIB: A shocker from Dell tonight could leave Wall Street shell-shocked tomorrow. Dell shares tumbled more than 6 percent in after-hours trading after the world`s largest personal computer maker issued an earnings warning late today. Dell said it expects its fiscal first quarter earnings to come in at $0.33 a share on revenues of $14.2 billion. Dell`s prior guidance called for earnings of as much as $0.38 on revenues of up to $14.6 billion. That was also the consensus on Wall Street. Analysts at Dell blamed the shortfall on recent pricing decisions. Analysts say market leader Dell is feeling the heat from competitors.

MARK LANYON, TECHNOLOGY HARDWARE ANALYST, MORNINGSTAR: Dell has attempted to grow a certain level of unit volume while maintaining margins and has struggled a bit more in each of the last few quarters doing so. So today I think marks a bit of a sea change in their strategy towards the market. They`re going to more aggressive in their pricing to grow those unit volumes and take share from competitors.

GHARIB: Dell is scheduled to report fiscal first quarter earnings after the closing bell next Monday. Lanyon says that`s when we`ll get a better view of Dell`s new pricing strategy.