NEW YORK (AP) — Dell Inc. reports its fiscal third-quarter results on Tuesday as the personal computer industry struggles from lower demand and competition from mobile devices ahead of the holiday season.
WHAT TO WATCH FOR: Investors will be looking for signs of PC spending growth among businesses and government agencies, where Dell counts most of its customers. The company also stands to benefit from falling prices for PC components.
Dell may also offer information on how it has been affected by shortages of hard disk drives because of heavy flooding in Thailand. Apple Inc. said a month ago that it expects production of its Mac computers to be affected, but it didn’t have enough information then to say how badly. Research firm IDC indicated last week that much of the impact on PC makers won’t be felt until early next year.
Dell’s results could be stronger than the overall PC market because the company relies more heavily on selling to businesses than to customers. The customer PC market has seen weak demand because of the economy and competition from tablet computers and smartphones.
Dell is also banking on its other businesses, such as technology services, to help protect it against swings in PC sales.
Dell’s results come just a few weeks after research firms IDC and Gartner Inc. reported that the company dropped to the No. 3 PC maker spot, losing second place to China’s Lenovo Group Ltd.
The world’s No. 1 PC maker, Hewlett-Packard Co., announced in late October that it is not planning to spin off its PC unit after all. In August, HP’s then-CEO, Leo Apotheker, said HP was looking into selling or spinning off its PC business. The blundered announcement quickened his removal as CEO.
WHY IT MATTERS: Dell is the world’s No. 3 PC maker behind HP and Lenovo. Its focus on the corporate market is proving helpful, with consumer PC demand flagging. About 80 percent of Dell’s PC revenue comes from business and government customers.
WHAT’S EXPECTED: On average, analysts polled by FactSet are expecting earnings of 47 cents per share on revenue of $15.66 billion.
LAST YEAR’S QUARTER: In November 2010, Dell reported net income of $822 million, or 42 cents per share. Adjusted earnings were 45 cents per share and excluded such items as a gain related to Dell’s failed bid to buy data-storage maker 3Par. Revenue was $15.4 billion.