Dell 4Q Earnings and Revenues Drop

A Dell computer logo is shown in Dallas, Wednesday, Feb. 28, 2007. Dell Inc. is expected to release quarterly earnings on Thursday, March 1, 2007. (AP Photo/LM Otero) (Lm Otero - AP)

DALLAS -- Dell Inc.'s fourth-quarter profits plunged 33 percent because of weak sales of laptops and notebooks, and the computer maker still faces an unresolved federal accounting probe, customer service complaints, several shareholder lawsuits and stiff competition from rivals.

But amid another disappointing quarter, analysts said Dell at least appears ready to do something about its many problems, even if it takes years to resolve.

Dell said it earned $673 million, or 30 cents per share in the quarter ended Feb. 2, compared with $1.01 billion, or 43 cents per share a year earlier. Revenue fell 4 percent, to $14.4 billion.

Analysts had expected the PC maker to earn 29 cents per share in the most recent quarter, according to a survey by Thomson Financial. The company didn't provide year-ago figures in its release.

Most glaring was the revenue shortfall in mobility products and desktop PCs, which combined, account for 58 percent of Dell's revenue.

Mobility products, which includes notebook computers, fell 2 percent to $3.8 billion despite a 2 percent increase in units shipped. Desktop PCs, meanwhile, saw an 18 percent decline in units year-over-year _ despite the launch of Microsoft Corp.'s new Vista operating system.

Analysts speculated that Dell's direct-sales model, which allows business and consumers to buy equipment directly from the company, is no longer the best way to sell products, especially portable, personal devices like notebooks.

Shifting tastes mean many consumers want to pick up and examine notebooks before they buy one, analyst Tim Bajarin of Creative Strategies said.

Just look at rivals like Apple Inc. and Hewlett-Packard Co., which during the same period saw robust sales of laptops because of good marketing and widespread retail availability, Bajarin said.

"I do believe Dell's going to have to be much more creative in reaching out to new customers who traditionally would only look at retail," he said.

Dell's results, issued in the form of a press release, mentioned several turnaround plans, including streamlining operations, shortening product development cycles and developing new approaches to manufacturing and distribution.

While specifics weren't mentioned, Dell's willingness to at least mention some changes was encouraging, said Carmi Levy, senior research analyst with Info-Tech Research Group.