The Dell comeback is under way with better sales, earnings
By Jacqueline Emigh, BetaNews
May 30, 2008, 4:12 PM
Led by a 43 percent boom in PC notebooks, Dell's sales of products and services climbed to $16.08 billion over the company's most recent quarter.
At this time last year, analysts were talking about the greatness of Dell, Inc. in the past tense. Yesterday, what's past is present again, as the company's sales growth has exceeded industry averages across servers, storage and PC desktops, according to Dell CEO Michael Dell.
"In notebook sales, we grew 43% while the industry was up 36%; and in servers we outgrew all major competitors with a 21% increase in units while the industry grew 7%. In desktops we were up 9% while the industry contracted in the quarter, and in storage our growth revenues accelerated to 15%," according to the Dell chief.
The CEO pointed to Dell's moves in virtualization and cloud computing -- along with the addition of products from its EqualLogic buyout --- as helping to drive Dell's growth on the enterprise side.
"We did have almost 37% share of the US server opportunity, which was a peak, highest-ever share for us. I think Dell was one of the first companies to embrace virtualization on the server front a couple of years ago," he said.
Dell executives also voiced optimism that the company could boost profitability further on the consumer products side, by expanding into more retail outlets than its current 13,000 stores worldwide.
"We don't break out retail and direct profitability. But suffice it to say [that] direct is a lot more profitable than retail. So we have a ways to go in retail. There is absolutely no doubt about it," acknowledged Don Carty, Dell's outgoing CFO.
"The opportunity here is massively larger than 13,000 stores," according to Mr. Dell, adding that the company also showed overall growth in all regions of the world over the past quarter.
Mr. Dell's recent return to more hands-on leadership is credited by some analysts for getting the company back on track after a time of faltering revenues.
Carty cited five strategies announced by the company a year ago as fueling the growth: "Restructuring the organization to move decision-making closer to the customer; improving customer satisfaction; introducing new innovative products across our entire portfolio and across all our regions; globalizing services;...and a comprehensive review of all costs."
The Dell execs also highlighted several specific product launches made during the quarter, including the Dell 500 notebook, which is designed for emerging markets; nine new servers, such as the "virtualization-optimized" R805 and R905 servers; and several storage products, including the EqualLogic PS5000 IP SAN.
"In addition, we are a leader in disruptive solutions for the cloud, powering about half of the fastest-growing Chinese Internet companies as well as the largest portal and the largest search engine providers in China," Mr. Dell told the analysts.
On the other hand, though, Carty said that Dell still wants to do a better job of cutting its costs on consumer products.
"We still have too many products that we think we are at a cost position on," the CFO elaborated. "We are successful in selling them. But by definition, if our costs were better, our margins would be better. So we have a lot to accomplish."
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