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.
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.
Last updated: Aug 12, 2005
MIKE HOFMAN was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City. @mikehofman