WHEN: TODAY, TUESDAY, MAY 14TH
WHERE: CNBC'S "SQUAWK ON THE STREET"
Following is the unofficial transcript of breaking news from CNBC's David Faber. Following is the link to the interview on CNBC.com: http://video.cnbc.com/gallery/?play=1&video=3000168380. All references must be sourced to CNBC.
DAVID FABER: WE'VE GOT A LITTLE NEWS HERE ON DELL TO SHARE. OF COURSE THAT BATTLE BETWEEN SOUTHEASTERN ASSET MANAGEMENT CARL ICAHN VERSUS PERHAPS MICHAEL DELL AND SILVER LAKE CONTINUES BUT WE'VE ALSO BEEN AWAITING EARNINGS FROM DELL WHICH WERE EXPECTED TO BE RELEASED A WEEK FROM TODAY NEXT TUESDAY. SOURCES THOUGH CLOSE TO THE SITUATION INDICATE IN FACT THOSE EARNINGS ARE GOING TO BE GIVEN OUT SOONER THAN HAD BEEN ANTICIPATED. DELL WILL REPORT ITS EARNINGS THIS THURSDAY AND IN PART THEY HAVE DECIDED TO DO SO BECAUSE THE BOTTOM LINE AT THE COMPANY IS GOING TO BE OFF FROM CONSENSUS ENOUGH THAT THEY FELT GIVEN SOME SPECULATION THAT'S BEEN OUT THERE ABOUT THE NATURE OF THOSE EARNINGS IN PART BECAUSE OF SOME THINGS WE'VE DISCUSSED RIGHT HERE IT WAS BETTER TO GET THEM OUT TO THE MARKET AS QUICKLY AS POSSIBLE. IT DOES APPEAR AGAIN ACCORDING TO SOURCES THAT THE BOTTOM LINE FOR THE COMPANY WILL BE BELOW EXPECTATIONS ALTHOUGH THE TOP LINE MORE OR LESS WILL BE BROADLY CONSISTENT WITH EXPECTATIONS. DELL HAS BEEN FIGHTING FOR MARKET SHARE THAT HAS BEEN TAKING MARGIN IN SO TO SPEAK AND WATCHING ITS MARGINS ERODE IN THE PC BUSINESS IN PARTICULAR AND APPARENTLY THAT HAS CONTINUED TO BE THE CASE FOR THE QUARTER THAT WILL BE REPORTED NOW ON THURSDAY. AGAIN SO TOP LINE OKAY BOTTOM LINE APPARENTLY OFF AND I AM ALSO TOLD AS WELL THAT IF YOU WERE TO ANNUALIZE THE OPERATING INCOME THAT WE WILL SEE FROM THE COMPANY FOR THE QUARTER TO BE REPORTED YOU WOULD GET TO A NUMBER WELL BELOW $3 BILLION. NOW, REMEMBER FOURTH QUARTER IS TYPICALLY A STRONGER QUARTER FOR MANY PC MAKERS GIVEN THE HOLIDAY SELLING SEASON AND THE LIKE NONETHELESS THE TREND POINTS TO A BELOW $3 BILLION ANNUAL OPERATING INCOME NUMBER IN FACT WELL BELOW I AM TOLD. THAT HAS BEEN A KEY NUMBER CARL IF YOU RECALL LAST JULY THEY WERE LOOKING FOR $5.6 BILLION IN OPERATING INCOME. IT HAS COME DOWN AND DOWN AND DOWN. IT DOESN'T NECESSARILY MEAN IT IS GOING TO IMPACT THE WAY ICAHN OR SOUTHEASTERN SEE THE COMPANY THEY INTENDED TO FOCUS NOT ON PCS BUT ON THE OTHER BUSINESSES THAT THEY HAVE. NONETHELESS IT DOES SHOW AN INCREDIBLY COMPETITIVE AREA WHERE THEY CAN CONTINUE TO SEE MARGINS ERODE, FREE CASH FLOW WILL ERODE THEN AND THAT DOES IMPACT YOUR ABILITY TO PUT LEVERAGE ON THE COMPANY AS WELL.
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