Dell Beats Street But Sees Sales, Profit Slide

Dell also said Nasdaq officials have agreed to stay the Round Rock, Texas, company's delisting from the exchange, giving it at least two more months to make its case.

For the quarter ended Dec. 31, 2006, Dell turned in revenue of $14.4 billion and earnings of $673 million, or 30 cents per share. According to Thomson Financial, the average analyst projection had Dell's earnings at 29 cents per share on sales of $14.88 billion.

Dell said it saved 6 cents per share during the quarter by cutting employee bonuses, but ongoing probes into the company's finances cost $89 million, or 3 cents per share.

For its 2005 fourth quarter, Dell posted earnings of $1.012 billion, or 43 cents per share, on sales of $15.3 billion.

In a press release, Dell gave no new information about investigations into its finances that have been hovering over the company since last year. Dell also said that any results it reported Thursday -- and results for its two most recent quarters -- might have to be restated.

"We are disappointed with the company's results, but what matters is our future plan of action," Dell Chairman and CEO Michael Dell said in a statement. "We are systematically moving to increase efficiencies, improve execution and transform the company.

"Our business model will become more aligned with the needs of our customers, which will improve their experience and yield improved growth and profitability for the long term," he said.

Dell said in the press release that the company's "transformation" was under way and would include new efforts at manufacturing, globalization and distribution. The company provided no details, and Dell executives didn't take questions from reporters or financial analysts.

Looking ahead, the company said it's working on a long-term transformation. "In the next several quarters, however, the company expects that growth and margins will continue to be under pressure as it implements and refines these actions," Dell said in the press release.

Dell's most recent problems began last August, when the company reported its earnings for the second quarter of last year. At the time, Dell's then-CFO Jim Schneider announced that the Securities and Exchange Commission was conducting an "informal investigation" into some accounting and balance-sheet issues. Other issues, Schneider said, had been discovered to cause Dell management to ask the audit committee of the company's board to undertake an investigation into those matters.

Schneider and Dell's then-CEO Kevin Rollins said at the time they didn't believe the investigations would have a material impact on Dell's previously reported earnings. Within a month, Dell announced that the U.S. Attorney for the Southern District of New York had subpoenaed four years of financial records, going back to 2002, and that restatements might have to be made after all. Along the way, Dell executives said they couldn't file their mandatory 10-Q quarterly financial reports with the SEC, which forced Nasdaq to threaten Dell with delisting. Schneider and Rollins later abruptly quit their posts.

Even without the investigations, delisting threat and executive resignations, Dell has found itself in turmoil. The company's growth has been slowing for more than 18 months, its profitability has been under pressure and it has lost the title of world's No. 1 PC maker to rival Hewlett-Packard.

Dell had until Thursday to present information to Nasdaq officials concerning its audit committee probe into corporate finances.