Menu
Dell passes the buck on Q4 losses

Dell passes the buck on Q4 losses

Dell will end this quarter with its revenues $US800 million less than forecast, but it's not the company's fault, analysts said.

As told by Dell, and faithfully repeated by the media, the company lost $300 million due to a dried-up chip supply from Intel and another $500 million to nasty Y2K slowdowns.

Most media outlets seemed content with the explanation that Dell was buffeted by external events. The New York Times quoted analysts who described the company as having been humbled by industry events. The day before, a different Times article had heaped praise on Dell for its mastery of supply-chain management, noting that the company was known for its "extreme reliance on suppliers for components". The Washington Post issued soothing words to the effect that Compaq and Gateway had also missed targets, and that 1999 was a stellar year for Dell.

While the major dailies focused on Dell, online outlets went straight for the Intel angle. The Wall Street Journal, News.com, and ZDNet raised the issue of whether Dell might want to rethink its cozy relationship with Intel, given that monogamy had just cost Dell $300 million. "On the processor side, we are completely Intel at this point," News.com quoted CEO Michael Dell as saying during the conference call, squashing speculation that the company might switch to AMD.

Pockets of scepticism about Dell's role in the earnings shortfall were hard to find. "It's an execution problem they have had for the last six quarters," Steve Dube of Wasserstein Pirella & Co told Dell's backyard paper, the Austin-American Statesman. "You can blame external factors: components and Y2K. But the fact is they have been able to work through problems in the past."

The Journal called Dell's strategy of going for whiz-bang technologies risky. The Dallas Morning News saved a quote from Andrew Neff of Bear Stearns about whether "there's something more fundamental going on" for the last line of its coverage.

TheStreet.com pointed out that Dell's one-time excuse might just work: it's similar to the one Gateway used on January 5, when it warned that it wouldn't meet fourth-quarter earnings estimates. Wall Street bought the story, noted reporter Eric Moskowitz, and Gateway's stock rose 5 per cent.


Follow Us

Join the newsletter!

Error: Please check your email address.
Show Comments