Pricing Pressures Lead Dell To Lower 1Q Forecast

Dell lowered guidance for its first quarter Monday as the build-to-order PC maker struggles with pricing issues.

Dell warned that it now expects earnings to come in at 33 cents per share for the quarter on revenue of some $14.2 billion. That is down from expected earnings of 36 cents to 38 cents per share on revenue of $14.2 billion to $14.6 billion the company originally projected when reporting its fourth quarter results in February. Even those projections were below previous estimates.

Dell's CEO Kevin Rollins told analysts who questioned the lowered estimates at that time that the first quarter is always the most difficult.

The Round Rock, Texas, company attributed the latest shortfall to "pricing decisions" in the second-half of the quarter. This is likely a reference to increased price cutting by the computer maker, as competition heats up.But Dell also said the price cuts would accelerate revenue growth in the future.

"During Q1 we continued to execute on our strategy to reinvigorate growth by making investments in our support infrastructure and product quality and by accelerating pricing adjustments," Rollins said in a statement.Dell is slated to announce the quarter's results on May 18.

Dell has taken hits on multiple fronts in the past several months. The PC maker has seen increased complaints on its customer service and product quality while a new competitor in the United States, Lenovo, launched its first branded line for the domestic market along with an aggressive VAR recruitment campaign. At the same time, solution providers that have been selling systems with powerful server chips from Advanced Micro Devices said they have been winning bids against Dell. Dell has been exclusively using CPUs from Intel, missing out on the popularity of AMD's latest offerings.