There has to be a better way

IT News & Views

Subscribe to IT News & Views: eMailAlertsEmail Alerts newslettersWeekly Newsletters
Get IT News & Views: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


IT News Authors: Joe Austin, Satyen Vyas, Elena Yakymchuk, Jim Malone, OnPage Blog

Related Topics: SOA & WOA Magazine, Dell News on Ulitzer, Economics for Investors, IT News & Views

Article

Dell Earnings a Big Surprise

It made 42 cents a share or $822 million, better than double last year, on sales up 19% to $15.39 billion

Dell turned up Thursday with fiscal third-quarter numbers that were high on earnings but light on revenues.

It made 42 cents a share or $822 million, better than double last year, on sales up 19% to $15.39 billion against expectations of 32 cents a share on $15.756 billion.

Revenues were down sequentially. They were $15.5 billion in fiscal Q2.

The company said the consumer segment was softer-than-expected on lack of demand, up 4% to $3 billion, raising the question of whether that result is Dell-specific. It's not playing in any significant way in the growth sectors of smartphones and tablets. The segment only broke even for Dell although retail was profitable. It said it shipped more products by sea ahead of the holidays.

Despite Cisco's experience, Dell's revenue from the public sector, which includes health care, was up 20% to $4.4 billion earning $451 million. Dell explained that state and local government, where Cisco really got walloped upside the head, represents only 3% of its total business but was up 5%.

The enterprise came through with $4.3 billion, up 27% year-over-year, yielding $400 million. Dell said enterprise solutions and services revenue was $1.7 billion, up 25%, and client revenue increased 38%, which it attributed to the refresh cycle. EqualLogic storage was up 66%. Servers to the enterprise were up 16%. Service was up 55% to $1.9 billion driven by Perot, now a year as part of Dell.

SMB revenue was $3.7 billion, up 24%, returning profits up 39% to $391 million. Servers here were up 28%, clients 27%, storage 24%.

PCs and laptops still represent 56% of Dell's revenue. Virtual desktops, it said, are rare. Desktop revenues were up 21% to $3.6 billion; mobility revenue was up 16% to $4.8 billion. Server revenue overall was up 20% to $1.8 billion.

Dell appears to have sacrificed unit revenues to profitability, helped by lower costs of components like memory and drives. It saw a gross margin of 20% against expectations of 17.5%

It said Asia-Pacific and Japan revenue combined grew 29%, EMEA 15% and the Americas 18%. BRIC revenues were up 30%, led by a 55% increase in India. China was up 20%, Russia 40%. These countries now represent 13% of Dell's total revenue.

It's got $14 billion in the bank.

It expects fourth-quarter revenue to be up slightly quarter-over-quarter thanks to the commercial side. The Street has it down for revenues at $16.3 billion. It ain't gonna make that number.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.