SAN FRANCISCO (Reuters) - Dell Inc's
Shares of Dell, the No. 3 maker of personal computers, tumbled 6 percent following the results, which also show a decline in gross margin that disturbed Wall Street analysts.
The weak performance reflected the growing divide between Dell and its larger rival Hewlett-Packard Co
"It was universally expected they would beat because pretty much everyone else in the PC space has posted strong numbers," Kaufman Bros. analyst Shaw Wu said of Dell. "So the conclusion is that they lost share -- lost a lot of share."
Despite the report, Dell executives spoke optimistically about demand trends and expectations for a wave of new spending next year as companies update aging equipment.
PC sales had weakened ahead of the October 22 launch of Microsoft Corp's"I think it's going to be a pretty powerful cycle," Chief Executive Michael Dell said, repeating earlier assertions.
Dell reported a net profit of $337 million, or 17 cents a share, for its fiscal third quarter, down from $727 million, or 37 cents a share, in the year-ago period.
Revenue fell 15 percent to $12.9 billion, missing the average analyst estimate of $13.2 billion, according to Thomson Reuters I/B/E/S.
While the revenue shortfall was troubling, some analysts also expressed concern about Dell's margins, particularly because the company had stressed profitability over growth amid a $4 billion cost-cutting effort.
Dell said it saw pressure on component costs, a trend that has continued into the current quarter. Its gross margin was 17.3 percent in the third quarter, down from 18.7 percent in the second quarter and 18.8 percent in the year-ago period.
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