Dell Inc. (NASDAQ: DELL) is out with its earnings report. We knew that this report had the possibility of coming with a serious conflict of interest as Michael Dell is trying to take the company private. The PC giant and IT player showed that earnings came in at $0.40 per share on a comparable basis and revenue fell slightly less than expected to $14.3 billion in fourth quarter. Thomson Reuters had estimates $0.39 in earnings per share versus $0.51 a year ago on a drop in sales of about 12% to $14.12 billion.

All in all, the numbers look fair on the surface but the reality is that this shows a continued erosion in the core markets. Dell’s CFO tried to tout growth of 6 percent in the company’s enterprise solutions and services business. Its cash flow from operations was $1.4 billion in the quarter. Some of the other listed issues per unit were as follows:

• Dell server revenue increased 5 percent;
• Dell networking showed a 42 percent revenue increase;
• Large Enterprise had revenue of $4.7 billion in the quarter, a 7 percent decrease;
• Public revenue was $3.5 billion, a 9 percent decrease;
• Small and Medium Business revenue was $3.4 billion, a 5 percent decrease;
• Consumer revenue was $2.8 billion, a 24 percent decline for the quarter;
• Euro/Mid-East, Africa revenue decreased 14 percent;
• Americas was down 10 percent;
• Asia-Pacific and Japan declined 9 percent.

Here is where you see the erosion taking place. Dell’s desktop and mobility business revenue fell by 20 percent year over year for what is effectively the “Christmas quarter” and that was only up by 3 percent sequentially. Look up at the consumer drop and it was 24 percent from a year earlier. In short, PCs just are not making it to the gift list.

Unless Michael Dell makes some new revelation about the M&A process or the price of the proposed $13.65 per share go-private transaction, we are not looking for any major price change based upon today’s report. The company will not be providing guidance ahead due to its M&A process.

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