* Dell Q4 revenue down 11 pct but beats estimates slightly
* Declines to give forecast due to pending buyout offer
* Founder and CEO Dell skips conference call
By Poornima Gupta
SAN FRANCISCO, Feb 19 Dell Inc on
Tuesday reported a 31 percent drop in profit, hurt by a
shrinking consumer business, as investors weighed founder
Michael Dell's offer to buy out the world's No.3 maker of
Michael Dell, teaming up with private equity firm Silver
Lake and software maker Microsoft, is offering $13.65 a
share to buy out the company, but at least four of its largest
investors are opposed to the $24.4 billion deal.
The founder and CEO did not join in management discussion of
the results in a conference call with analysts, given his
participation in the buyout. Dell executives also did not
comment on the buyout.
Analysts said Dell's rapidly shrinking business and murky
prospects in a declining PC market may make the buyout a more
attractive option for investors tired of waiting for a
Since news of the proposed buyout emerged in January, the
stock has gained almost 30 percent - a rally that analysts say
may evaporate should the deal fall through.
On Tuesday, the company said 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
Overall, however, revenue slid 11 percent.
"There isn't anything really to be super excited about,"
Brian Marshall, analyst with ISI Group, said, adding that
declining revenue and profit doesn't bode well for the company.
"The (buyout) deal makes sense. It will go through," he
said. "They will probably have to pay a little more than $13.65
to get it done but at the end of the day there aren't a lot of
options out there."
The company gave no financial forecast for fiscal 2014 or
the fiscal first quarter, citing the proposed buyout.
The company reiterated that it plans to file a proxy
statement with the U.S. securities regulators on the merger
agreement but made no other reference to the buyout in its
Shareholders representing almost 14 percent of Dell shares
not held by Michael Dell have now said they will vote against
the deal. The billionaire, who created the computer maker from
his college dorm room in 1984, holds a roughly 16 percent stake
and needs a majority of shareholders - excluding him - to vote
for the deal.
Some are holding out hope for a higher offer. Peter Misek,
analyst with Jefferies, said a bumped-up offer of about $15 per
share was a "fair price."
"The better-than-expected results means that's the fair
thing to do, in our opinion, is to raise the bid to a price
where current shareholders reap some of the rewards while the
take-private consortium enjoys the prospect of a respectable
return," Misek said.
SLIDING PC SALES
Dell posted net income of $530 million, or 30 cents a share,
in its fiscal fourth quarter on revenue of $14.3 billion. That
came in slightly higher than the average analyst estimate of
revenue of $14.12 billion, according to Thomson Reuters I/B/E/S.
Excluding certain items, it earned 40 cents a share,
compared to an average forecast for 39 cents.
Shares of the company edged 0.5 percent higher in
after-hours trade to $13.87, from a close of $13.805 on the
Dell has said it plans to stick to its current turnaround
strategy to diversify away from personal computers following the
The company, once regarded as a model of innovation in the
early 2000s for pioneering online ordering of custom-configured
PCs, missed the big industry shift to tablet computers,
smartphones and high-powered consumer electronics such as music
It is also had to defend its market share against
hard-charging Asian rivals like Lenovo.
Dell has lost 40 percent of its value since last year's peak
and is trying to reinvent itself as a seller of services to
corporations - an internal overhaul that some analysts say may
be better conducted away from public scrutiny.
The company, was also hurt by the slide in holiday-season
sales of personal computers for the first time in more than five
years despite the launch of Microsoft Corp's new
Windows 8 operating system.
Dell's worldwide PC shipments fell nearly 21 percent to 9.48
million in the last three months of 2012 from 11.97 million in
the same period a year ago, according to IDC.
The bright spot for Dell was its growing sales of its
enterprise solutions and services revenue, which rose 6 percent
to $5.2 billion, and accounted for 34 percent of revenue for
In contrast, consumer revenue plummeted 24 percent to $2.8
billion, underscoring the plight of the broader PC market while
sales to large corporations declined 7 percent to $4.7 billion
in the quarter.
Dell said it was seeing growth in tablets and low-end
desktops and notebooks. It ended fiscal 2013 with $15.3 billion
in cash and investments.