Dell's commercial and enterprise IT business boosted the PC-maker to a 22 percent revenue hike during the second quarter of its fiscal year 2011. Consumer sales were flat.
Dell beat Wall Street's modest revenue growth predictions for the
second quarter of its fiscal year 2011. The Texas PC maker posted
revenue of $15.5 billion, up 22 percent compared to the $12.7 billion
in revenue the company pulled in a year earlier. Net income for the
quarter was $629 million-up 9 percent from 2010.
In a call with analysts, Dell executives said strong demand from
commercial customers drove its better-than-expected upward movement.
Dell's server and networking revenues, driven by blade server sales,
increased by 35 percent. Storage revenue for the quarter improved by 13
Service revenue, with the inclusion of Perot Systems, was up 57
percent, and thanks to a continuing corporate refresh cycle-following
the release of Microsoft's Windows 7-Dell reported that it saw revenue
in total mobility and desktop products grow 21 and 17 percent,
Revenue in its consumer business, however, remained flat at $2.9 billion and operating income was a $21 million loss.
"We're confident we can improve our consumer business operating
margins to the 2 percent level in the near term," Dell CFO Brian
Gladden said during the company's Aug. 19 conference call with
analysts. "We've been repositioning the business, which involves
targeting our efforts to the right geographies, products and customer
sub-segments. We have a solid product portfolio lining up for the
holidays, and we're making progress in simplifying our product
During the second quarter of 2010, Dell's PC shipments were neck-and-neck with rival Acer's.
By research firm Gartner's estimates, Acer held the No. 2 worldwide
position, shipping 10.8 million units to Dell's 10.3 million; IDC,
however, put Dell in the No. 2 spot, with an estimated 10.6
million units to Acer's 10.2 million. Nonetheless, Dell's back-to-school
sales in the United States have proven modest.
"As we laid out at [our recent] analyst meeting, we have some pretty
dramatic and significant actions underway to improve profitability in
the business, especially in the retail business, and we've seen some
progress there," Gladden offered. "Though, it's not quite evident yet."
Dell additionally joined the U.S. consumer smartphone space Aug. 13, with the launch of the Streak,
its first Android smartphone, of sorts, for the U.S. consumer
market. The Streak, which offers cellular service as well as WiFi and
5-inch touch display, falls into an unusual space, as it's small for a
tablet but large for a smartphone. Its price tag-$100 higher than
current high-end smartphones but $200 less than Apple's least expensive
iPad (when purchased with a two-year AT&T service plan)-has left
analysts equally unsure of how the hybrid device will fare with
During the Aug. 19 call, CEO Michael Dell was asked what affect the
Apple iPad-as well at the number of Android-running devices expected
to join the tablet space in time for the holiday season-have on his
thoughts, regarding the positioning of the Streak toward the end of the
year. Dell's answer, however, was more of a non-answer.
"I think it's a question of how many tablets do you think will be
sold. If the PC market is 380 million units and the tablet market
is-take a guess. I'm not sure that it's a huge percentage this year,"
said. "Certainly there's a lot of excitement around Android, and we're
participating in that. Lots of folks are working on tablet and
touch-type solutions. I think next year you'll see a lot more of them."
Dell's consumer business comprises 19 percent of its income, and in
a written statement proceeding the call, CEO Dell made his priorities
"This quarter's results are a strong reflection of the progress
we've made," Dell said in the statement, "and we remain very focused on
delivering the best possible solutions and services to meet our
customers' IT needs."