Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Dell Sales Fall Short, but Profit and Guidance Look Positive

Dell just reported quarterly earnings, and the numbers are a bit mixed. First off, sales in the fourth quarter were $15.692 billion, just a whisker short of consensus analyst expectations of $15.72 billion. That represents a 5 percent improvement over a year ago.

Per-share earnings, however, were way ahead of the consensus at 53 cents versus 37 cents, amounting to a change of 89 percent over the year-ago quarter.

In its outlook, Dell said it expects revenue to to grow in the range of 5 to 9 percent in its fiscal year 2012 (underway as of Jan. 29), and for profits to grow in a range of 6 to 12 percent. Cash flow from operations will exceed profits.

Dell shares are up more than 6 percent in after-hours trading.

Here are some highlights:

  • Enterprise sales and services grew 7 percent to $4.6 billion, or 29 percent of overall sales.
  • Server revenue increased 16 percent.
  • EqualLogic sales grew 49 percent and, combined with Dell PowerVault sales, accounted for almost two-thirds of storage sales and north of 80 percent of storage gross margin dollars.
  • Sales in the combined large enterprise, the public and small- to medium-business sector was up 9 percent to $12.4 billion in the quarter, with revenue for commercial laptop and desktop computers growing 10 percent.
  • PC profitability (Dell calls them clients) improved in the second half of the year, driven by improvements in the supply chain, lower input costs and improved product quality. For the full year, PC revenue grew 14 percent to $33.7 billion, driven on a refresh cycle from corporate buyers.

CEO Michael Dell sounded an optimistic note, the first I can recall in some time:

“I’m very pleased with our fiscal year results and the strong performance we’re seeing in our commercial businesses. We remain focused on developing and acquiring new technologies and capabilities, and our IT solutions portfolio has never been stronger. Customers are now seeing Dell in a fresh light, and we’re heading into the new year with strength and optimism.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik