For the first time in a long time, concerns about the vitality of the technology sector centered around the performance (or underperformance, that is) of Dell computer, the New York Times reports. The Austin area PC powerhouse reported weaker-than-expected quarterly results today, even as some key measures like market share, profits, and sales overseas rose. It should also be noted that revenue was fully 15% higher relative to last year/same quarter. The problem was that the firm was expected to gross $300 million more than it did: a projected $13.7 billion, versus the $13.4 billion Dell ended up with.
Dell's executive team and various analysts have suggested that the company's results fell short of its target due to slowing government spending on technology and over-generous discounts. Some analysts suggested that the company, which has grown by about 20% per year, may settle down to growing closer to 10% to 15%.
Most entrepreneurs I know would be pretty happy to sustain that rate of growth in a competitive market. And yet, the news was considered grave enough to send Dell's stock down by about three bucks a share; it was the most active decliner today on the Nasdaq in terms of dollar volume.
The last time Inc. wrote about Dell was in April, when we put founder and chairman Michael Dell on our cover (along with Richard Branson and Diane von Furstenburg) as 3 of the 26 "Entrepreneurs We Love".
I think we still love him, and that the company will more likely than not surprise us in the next few quarters. Moreover, I think it is utterly amazing that a company can do better this year than last year and be deemed to have failed rather than succeeded. Being inaccurate in your forecasting, it seems, trumps being successful in dollar terms in the minds of investors and observers. CEOs who intend to take their companies public someday would do well to keep that funny little fact in mind.
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