RSSThe Dell comeback is under way with better sales, earnings
by Jacqueline Emigh
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."
15 Comments
Good for them I still wouldn't buy a Dell.
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Kudos to Dell for the turnaround!
This is a somewhat minor point, but the first sentence led to some confusion on my part. My first thought was that Dell earned $16.08 billion BETTER than last quarter, which would have been beyond amazing, but I'm assuming that the statement should be meant to read that Dell earned $16.08 billion OVER THE PERIOD of the most recent quarter.
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They are doing great if one ascribes success to selling ~$500-700 computers.
And I would not expect this niche to last long term in the enterprise world, where hosted environments and virtualization will result in increased thin client terminals for employees - much in the model of VMWare and Citrix.
They are still failing in their other associated business niches.
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Did you even bother to read the article? didn't think so.
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Sure did...
Obviously you have not followed their other major business forays into managed systems.
And their laptop sales are in the low end sub $1K market, not the high end.
Sometimes what is not explicitly delineated is as important as what is. But I guess that assumes that one reads more than just this article.
Stick to making kids singalongs, Barney.
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Oh yeah, because it's expensive it's profitable...
Obviously you know nothing about economics or finances.
Stick to things you know something about (that should make for short reading) and learn how to spell at least at the 3rd grade level foxfire ;-)
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"Oh yeah, because it's expensive it's profitable..."
LOL! What?
Where did you receive your training in finance? Humpty Dumpty business school?
Bur congrats on totally ignoring their other major forays into managed services and the larger emerging trends in the enterprise space.
And as far as spelling, you can't even copy something accurately... so who is "foxfire"?
What a duffus purple dinosaur you are! You obviously don't think of allot of things!
What do you think the odds are that Barney the purple dinosaur is a Dell employee?
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"Oh yeah, because it's expensive it's profitable..."
LOL! What?
I believe that was sarcasm, sir.
Not a good basis for you to start flinging insults at him. I also believe the "Foxfire" was an intentional attack on your name (which I do not condone), as retaliation for you telling him to "make singalongs".
Sometimes, it's best to be quick to read, and slow to reply :)
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Sometimes its even better to follow the trade mags and read about the larger trends in the marketplace and to read the interviews to see where Dell is placing their larger resources in an effort to grow their marketshare.
Managed services is where they want to grow. Fighting over a heavily contested low margine market niche for low end laptops is not a major growth area. For that matter, Apple owns over 60% of the high end laptop market. Does that make them dominant? No.
Its one thing to herald a limited world view in a larger more complex market, its another thing to myopically celebrate niche successes where the larger corporate impetus is still in question.
In that respect, sometimes its prudent to know what you are talking about in more than simply a response to a market footnote to which this article refers.
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Ridding themselves of all those employees must have helped also, though it wasn't quite as good for the employees.
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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.
I'd have to agree. I started working for Dell during the time Kevin came along and it just seemed like things were slipping then. I was very happy Michael came back.
The deals for their upper-end Optiplex 330 mini-towers in the small business division are pretty sweet right now, with $299 off (at least in the US division). Our company's fixing to take advantage of that one.
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Dude you're getting a DELL!!! That is at least if you work for JPMorganChase, which is where I would attribute most of their comeback to.
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They just better stick to their deals and financing. A good saying in business is "say what you mean and mean what you say".
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usually, the tiny fine print that people forget to look for because they didn't have a magnifying glass at the time they signed on the dotted line, allows the creditor to change the terms of the agreement at any time they please.
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lol
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