* Lowers full-year revenue growth view to 1 to 5 percent
* Tempers expectations ahead of HP's results
* Shares down more than 7 percent
(Adds details on results, analyst comment and background)
By Poornima Gupta
SAN FRANCISCO, Aug 16 Dell Inc DELL.O slashed
its 2012 revenue forecast as an already weak outlook for
technology spending this year worsened, sending its shares more
than 7 percent lower.
The No. 2 personal computer maker on Tuesday cut its
full-year revenue growth estimate to just 1 to 5 percent, from
5 to 9 percent previously, citing growing uncertainty about
whether government and corporate spending on everything from
servers to software can hold up in the face of flagging
Dell's move did not bode well for rivals such as
Hewlett-Packard Co (HPQ.N). Shares of HP, a more diversified
computing hardware and services vendor than Dell and more
reliant on consumers, slid 1.3 percent.
Industry executives warn that corporate and government
spending may have begun to wane on fears of a second-half
economic growth slowdown, while a high jobless rate pressures
HP, the world's No. 1 PC maker, striving for a turnaround
after several disappointing quarters, will report quarterly
earnings on Thursday.
"We are going to see similar trends" with HP, said Brian
Marshall, analyst with Gleacher & Co, noting "maybe some
weakness on the topline."
He also noted a "pause" in technology business spending.
The company founded by Michael Dell has consistently beaten
Wall Street expectations this year, a result of expanding its
footprint in higher-margin businesses such as servers, storage
and computer services.
"From a market standpoint, clearly there's a different
demand dynamic as you think about revenue growth," Dell Chief
Financial Officer Brian Gladden said in an interview. "It's a
bit of an uncertain environment."
Dell slid 7.65 percent to $14.60 after hours, from a close
of $15.80 on Nasdaq.
AND THE BAR COMES DOWN AGAIN
Before Tuesday's results, many analysts had already lowered
their calendar 2011 projections as global markets tanked and
economies headed for choppy waters. Corporations like Dell may
be forced to reduce their full-year targets as demand slows.
During an annual analysts' day in June, executives pledged
to maintain their pace of acquisitions -- it completed its $960
million purchase of Compellent in February -- to gain access to
corporate clients, and to safeguard margins.
But Wall Street on Tuesday focused on anemic revenue
growth, ignoring a 22.5 percent gross margin in the second
quarter that actually exceeded analysts' projections by more
than a full point.
Dell, which in May forecast strong government spending and
a good back-to-school season, recorded sales of just under
$15.7 billion in its fiscal second quarter ended July.
That marginally missed the $15.76 billion average forecast
of Wall Street analysts polled by Thomson Reuters I/B/E/S.
It added that sales this quarter would likely stay flat
from last quarter.
Dell posted net income of about $890 million, or 48 cents a
share, in the quarter ended July, versus $545 million, or 28
cents a share, a year earlier. Excluding certain items, it
earned 54 cents a share.
Analysts had expected 49 cents, according to Thomson
Reuters I/B/E/S, but it was not immediately clear if that
estimate was comparable.
(Editing by Richard Chang)