Dell Earnings Rise 46 Percent; Production Delays Slow Turnaround
Make no mistake, Dell is in the black. But production delays, particularly problems in getting the vivid paint colors of its new line of notebook computers right, are preventing the struggling company from growing as quickly as investors have hoped.
Dell reported Thursday that lower component prices helped push net income in its second quarter up 46 percent, to $733 million, or 32 cents a share, from $502 million, or 22 cents, in the year-earlier period. Revenue grew 4.8 percent, to $14.77 billion, from $14.09 billion.
“The turnaround looks to be on track, but the reality is that the expectations were low,” said Shaw Wu, a computer sector analyst with American Technology Research. “They are good, but not great.”
Dell managed to beat income and revenue predictions of a consensus of Wall Street analysts, who estimated Dell would report sales of $14.6 billion and net income of 30 cents a share. But Wall Street analysts said that their projections were modest and that Dell continued to lose market share to competitors like Hewlett-Packard and Acer.
Hewlett-Packard, for instance, said that its PC sales grew 29 percent, to $8.9 billion, in the three-month period when Dell’s PC sales grew 3.5 percent, to $8.9 billion.
Dell’s stock rose 0.5 percent in after-hours trading Thursday after closing at $28.46. Dell made its announcement after regular trading ended.
Intrusive Security Checks By NASA Prompts Lawsuit
Twenty-eight scientists, engineers and other workers at one of NASA’s top research centers filed suit in federal court on Thursday challenging new security measures, including queries about “loyalty” and sexual orientation, that they say violate their constitutional rights.
The employees work at the Jet Propulsion Laboratory in Pasadena, Calif., which is operated for NASA under contract by the California Institute of Technology. More than 5,000 workers at the laboratory are not government employees, but work for the university or other contractors.
To obtain new identification badges, NASA is requiring private workers at all facilities to provide detailed background information and sign waivers allowing open-ended checks of past employment, queries of former employers and neighbors, fingerprinting and other measures.
Civil servants have long had to undergo background checks. But in the suit — filed in U.S. District Court against NASA, Caltech, and the Commerce Department — the plaintiffs say the new security checks required of nongovernment workers invade their privacy and violate other rights. The suit may grow to include other employees.
Veronica McGregor, a spokeswoman for the propulsion laboratory, said the agency did not comment on matters under litigation and added that the new badge program was being carried out under “a government-wide directive.”
Cancer Society Focuses In Ads on Uninsured
The American Cancer Society, in a stark departure from past practice, plans to devote its entire $15 million advertising budget this year not to smoking cessation or colorectal screening but to the consequences of inadequate health coverage.
The campaign was born of the group’s frustration that cancer rates are not dropping as rapidly as hoped, and of recent research linking a lack of insurance to delays in detecting malignancies.
Though the advertisements are nonpartisan and pointedly avoid specific prescriptions, they are intended to intensify the political focus on an issue that is already receiving considerable attention from presidential candidates in both parties.
The society’s advertisements are unique, according to experts in both philanthropy and advertising, in that disease-fighting charities traditionally limit their public appeals to narrower aspects of prevention or education.
But the leaders of a number of such organizations, including the American Heart Association, the American Diabetes Association and the Alzheimer’s Association, said they applauded the campaign’s message that progress against chronic disease will be halting until the country fixes its health care system.
NBC to End iTunes Deal Over Pricing
NBC Universal, unable to come to an agreement with Apple on pricing, has decided not to renew its contract to sell digital downloads of television shows on iTunes.
The media conglomerate — which is the No. 1 supplier of digital video to Apple’s online store, accounting for about 40 percent of downloads — notified Apple of its decision late Thursday, according to a person familiar with the matter who asked for anonymity because negotiations between the companies are confidential.
A spokesman for NBC Universal, part of General Electric, confirmed the decision, but otherwise declined to comment. The decision by NBC Universal highlights the escalating tension between Apple and media companies, which are unhappy that Apple will not give them more control over the pricing of songs and videos that are sold on iTunes. NBC Universal is also seeking better piracy controls and wants Apple to allow it to bundle videos to increase revenue, the person familiar with the matter said.
NBC Universal is the second major iTunes supplier recently to have a rift with Apple over pricing and packaging matters.