Dell Sells Off Despite Topping Analyst Estimates

Posted Feb 19th 2010 8:30AM by Michael Fowlkes
Filed under: Earnings Reports, Dell (DELL), Technology

Personal computer giant Dell Inc. (DELL) traded sharply lower in after hours trading following Thursday's fourth quarter earnings report.

Going into the earnings announcement, Wall Street was expecting to see the company show earnings of 27 cents per share. Excluding special items the company posted earnings of 28 cents per share for the quarter.

During the same period last year the company earned 29 cents per share.

Looking towards its current first quarter, the company did not issue any sort of guidance, but its chief financial officer, Brian Gladden, stated that the company remains cautiously optimistic that it will continue to see solid corporate demand.

The company's revenues did come in above expectations with an 11% jump to $14.9 billion. Analysts were looking to see revenues of $13.8 billion.

The main reason why traders are selling the stock after hours is disappointing profit margins. Gross profit margins were expected to be 18% during the quarter, but were a disappointing 17.4%.

The two main reasons for the disappointing profit margins was increased demand for its less profitable PC's and rising component costs.

The stock was down over 5% in premarket trading Friday.

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