Dell Updates Q3 Guidance
Nov 2, 2005
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Business appliance maker Dell said it expects to achieve earnings per share of U.S. $0.39 on a non-generally accepted accounting principles (GAAP) basis, which is at the low end of the range of its previous guidance for fiscal 2006 third quarter.

Additionally, Dell said it expects revenue to be approximately $13.9 billion versus its original guidance of $14.1 to $14.5 billion.

The shortfall in revenue was driven in part by the company's consumer business in the U.S. and United Kingdom, which fell short of expectations, Dell said. The company said it will continue to refocus on higher-value products and services while optimizing profitability.

Dell also said it will take a charge in its fiscal third quarter of approximately $450 million, or roughly $0.14 per share, yielding expected GAAP earnings per share of $0.25.

More than $300 million of the charge is associated with the cost of servicing systems that included a vendor part that failed to perform to Dell's specifications. This issue is limited to a small percentage of previous generation OptiPlex desktop systems. The charge also includes the costs of workforce realignment, product rationalizations and excess facilities. These actions are designed to streamline the business to improve operating efficiency.

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