Dell Computer Thursday missed lowered fourth-quarter projections and revised its guidance for the current quarter. Excluding charges, Dell reported earnings of $508m (£350m), or 18 cents a share. A consensus of analysts polled by First Call expected earnings of 19 cents per share. In the same period a year earlier, Dell posted earnings of $436 million, or 16 cents a share. The Texas-based company reported revenue of $8.7 billion for the quarter, compared with $6.8 billion in the same period a year earlier. For full-year 2000, revenue reached $31.9 billion, up from $25.3 billion a year earlier, for an increase of 26 percent. Earnings reached $2.3 billion, or 84 cents a share, compared with $1.9 billion, or 68 cents a share, in 1999. A First Call consensus of analysts had projected earnings of 85 cents per share. Factoring in a $105 million charge, Dell posted earnings of $434 million, or 16 cents a share for the quarter--and $2.18 billion, or 79 cents a share, for the year. As expected, Dell responded to an industry-wide slump by resetting revenue expectations for the current quarter. The computer maker lowered its first-quarter revenue projections to $8 billion--a decline of 8 percent compared with its fourth quarter--as the company hunkers down. Dell now expects first-quarter earnings per share around 17 cents, 2 cents below a FirstCall polling of analysts. Dell also expects operating margins to remain flat from its fourth quarter. The company refrained from giving 2001 guidance, citing the uncertainty of the PC market. "We're bullish about our current position in the market and our prospects for future growth," CEO Michael Dell told financial analysts during a Thursday afternoon conference call. "In all economic environments, the efficiency of the Dell model allows us to drive profitable share growth." Like many other PC makers, Dell issued a fourth-quarter earnings warning last month, citing the sluggish U.S. economy and slowing PC sales. Before the warning, analysts had projected revenue of $8.7 billion and earnings of 25 cents per share for the quarter and 91 cents for the year. Coincidently, a year ago, Dell also lowered expectations for that fourth quarter because of component supply issues. Earlier Thursday, Dell said it will cut 1,700 permanent jobs, its first major layoff since the company's founding in 1984. The layoffs were expected, as Dell already had reduced its temporary staff. "We don't plan for any across-the-board layoffs into next year," Dell Vice Chairman James Vanderslice said on a Thursday afternoon conference call with the press. "This is the one we planned for the year, and we're complete now." The timing of the layoffs perplexed some analysts, who had anticipated the announcement concurrent with earnings and not hours earlier. "It was a good pre-emptive strategy, breaking up the bad news--that is layering it," said Technology Business Research analyst Brooks Gray. "I've never seen them come out with two warning signals--layoffs and closing of the Dell Marketplace--so close to earnings. That's two layers leading up to earnings, rather than delivering all the bad news once." The company last week closed its marketplace--an online exchange for buying from Dell or select third parties--after only four months of operation. Dell said that it would take a charge of $105 million related to layoffs and facilities consolidation. "The charge was fairly equally split between the cost of severing people and the amount of money we put aside for facility consolidations," James Schneider, Dell's chief financial officer, said on the press call. Schneider said those actions would save the company about $100 million in the coming year. To combat the slowing U.S. and European PC markets, Dell dramatically cut prices during the fourth quarter, said Gartner analyst Kevin Knox. But the aggressive pricing came with a cost: Dell reported that gross margins fell to 18 percent of net revenue from 21.3 percent in the third quarter. "Whenever you drop your average selling price, you take a hit on gross margins," Knox said. Dell Vice Chairman Kevin Rollins offered his own take on margins. "It has always been our goal to price to grow and be competitive," he said on the press call. "We've seen an opportunity most recently to get more aggressive with pricing and subsequently you've seen our margins change." In the fourth quarter, revenue from services rose 59 percent to $785 million from the same period a year earlier. Combined services and peripheral product sales rose 54 percent to $1.7 billion--about 19 percent of Dell's total revenue. Quarterly revenue for corporate products, including servers, storage and workstations, rose 42 percent year over year. Rack-mount servers accounted for about 40 percent of all server revenue, with growth of 230 percent year over year. Sales of eight-processor servers grew 73 percent, while workstation revenue rose by around 50 percent. "Our enterprise products, services and our notebook products are now in excess of 50 percent of our overall revenue and in excess of two-thirds of our profitability," Rollins said. Geographically, sales in the United States rose 27 percent in the quarter compared with the same period a year earlier, while Europe, the Middle East and Africa gained 23 percent. Sales for the Asia-Pacific region and Japan rose 51 percent, with Japan alone posting a 120 percent year-over-year gain. Revenue in Latin America and Canada increased 47 percent. See techTrader for technology investment news, plus quotes and research. Have your say instantly, and see what others have said. 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