Dell stuns investors with rare revenue miss

Desktop dive

A pair of computer glitches have eaten into Dell's third quarter with the company today lowering revenue guidance for the period.

Dell now expects third quarter revenue to come in at $13.9bn - well below a previous revenue range of between $14.1b and $14.5bn. Weak sales of consumer goods in the US and business products in the UK were fingered for the shortfall. The earnings miss stands as a rare occurrence for the hardware maker.

Dell's third quarter plot thickened more as it revealed a $450m charge that will cost it 14 cents per share. More than $300m of the charge stemmed from the cost of fixing OptiPlex desktops that suffered from "a vendor part that failed to perform to Dell's specifications."

"The charge also includes the costs of workforce realignment, product rationalizations and excess facilities," Dell said.

The Austin American-Statesman reported that Dell laid off hundreds of workers last week.

Analysts will be paying close attention to see if Dell's results also suffered as a result of increasing interest in AMD's Opteron processor. Dell is the only major server vendor not to sell servers with the increasingly popular chip, opting for an Intel-only position. Intel has fallen behind its rival with dual-core processor technology, making Opteron servers more attractive to the likes of HP, IBM and Sun Microsystems and their customers.

Dell announces full third quarter results on Nov. 10. ®