Dell shares lower on weak forecast
(Reuters) - Shares of Dell Inc DELL.O fell 15 percent on Wednesday after a weak revenue forecast and disappointing quarterly results triggered stock price target cuts by a slew of brokerages on the world's No. 3 personal computer maker.
Dell shares were down $2.28 at $12.80 on Nasdaq in morning trade after it forecast revenue of $14.7 billion to $15 billion in the current quarter, well short of analysts' average forecast of $15.4 billion.
A cautious IT spending environment and challenges in its PC business will keep dogging Dell in fiscal 2013, BMO Capital Markets analyst Jung Pak wrote in a research report, cutting the price target on the stock to $16 from $18.
Analyst Rob Cihra of Evercore Partners said Dell, which competes with computer makers like Hewlett-Packard (HPQ.N: Quote) and Lenovo Group (0992.HK: Quote), may be forced to cut its prices in order to boost revenue.
"We think Dell continues to walk away from just too much business in the name of margin stability," Cihra said in a research note.
"We just don't see how Dell can keep trying to avoid competitive pricing," the analyst added, noting that the company will otherwise have a hard time differentiating its computers, which, like its rivals' products, are based on Intel Corp (INTC.O: Quote) chips and Microsoft Corp (MSFT.O: Quote) software.
Dell's first-quarter earnings and revenue were also lower than expected, hurt by weak sales to consumers, large enterprises and government units. Mobile devices like the iPad have hit demand for PCs.
"The non-PC transformation is not big enough yet to absorb acute pains in PCs," said JPMorgan Securities analyst Mark Moskowitz, who cut his price target to $19 from $21.
(Reporting by Supantha Mukherjee in Bangalore and Sinead Carew in New York; Editing by Joyjeet Das and John Wallace)
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