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Dell profit dives as PC sales sag [Times of Oman](Times of Oman Via Acquire Media NewsEdge) New York: Dell reported fiscal first-quarter profit that missed analysts' estimates, underscoring a worsening outlook that bolsters a buyout proposal by its founder to turn around the personal-computer maker as a private company. Profit excluding some items fell to 21 cents a share for the period that ended on May 3, from 43 cents a year earlier, Round Rock, Texas-based Dell said in a statement. Analysts on average had projected 35 cents, according to estimates compiled by Bloomberg. Revenue declined 2.4 per cent to $14.1 billion, beating analysts' average $13.5 billion estimate. The plunge in profit supports a plan by Chief Executive Officer Michael Dell and Silver Lake Management to take the company private in a $24.4 billion leveraged buyout. The results also undermine the case made by investor Carl Icahn, who says investors will want to keep a stake as Dell shifts toward providing products and services for data centres. "The Icahn solution gets less attractive, and the bird in the hand looks better than the one in the bush," said Chris Whitmore, an analyst at Deutsche Bank in San Francisco, who has a hold rating for the shares.Competing proposal The Dell-Silver Lake group is offering to acquire the company for $13.65 a share. Icahn is arguing that Michael Dell is trying to buy the company cheaply and that shareholders would be better served by his proposal. Icahn and his partner Southeastern Asset Management Inc. plan to offer $12 a share in cash or stock to investors, while also letting them retain stakes in the company. "They're continuing to revise down profitability and cash flow, and the prospect of owning a stub becomes less attractive," Whitmore said. "Cash looks a lot better." Southeastern said its stake in Dell was unchanged in the first quarter, according to a filing.PC slump Dell's board predicted another year of lacklustre growth in 2014, and an adviser, the Boston Consulting Group, concluded that several acquisitions "had yielded far lower returns" than management anticipated. "These transformations are difficult and take a while, but they have the assets to do it," said Maynard Um, an analyst at Wells Fargo Securities. "It makes more sense to go private. Being a private company out of the public eye, if they have to get aggressive on pricing to win strategic accounts and accelerate R&D spending, they can do it without scrutiny." Some of Dell's biggest shareholders are curtailing their stakes in the company. T. Rowe Price Group, which had opposed the Michael Dell-Silver Lake deal, disclosed in a filing today that it sold 12 per cent of its stake in Dell during the first quarter. Blackstone Group withdrew from the process in April after conducting due diligence that led it to conclude the computer maker's enterprise solutions business was years away from competing meaningfully, according to a person familiar with the matter. (c) 2013 Muscat Press and Publishing House SAOC Provided by Syndigate.info an Albawaba.com company |