Dell reports that its fiscal 2010 first-quarter revenue declined 8 percent sequentially from the fourth quarter and dropped 23 percent from the previous year. However, the desktop and notebook maker emphasizes that it still generated strong cash flow and reduced expenses during the quarter. Dell officials decline to discuss whether layoffs are possible as a result of declining revenue.
For the first quarter of fiscal year 2010, Dell
has reported net revenue of $12.3 billion, down 23 percent from the
previous year and sequentially down 8 percent from the fourth quarter.
Net income for the first quarter was $290 million, a drop of 784 million
from the same quarter of the previous fiscal year.
"In what is still a challenging IT demand environment, we executed well
on the key elements of our strategy that we're focused on," Dell Chief Financial
Officer Brian Gladden said in an announcement of the numbers. "We kept our
focus this quarter on the elements of our business and the strategy that we
felt we could control, namely delivering great technology, service and value to
our customers, and continuing to drive toward the leading cost position and
driving disciplined, working capital management."
Gladden emphasized Dell's strong cash flow of $761 million and reduction of
operating expenses, which were down by more than $300 million. Dell's gross margin
was 17.6 percent for the quarter-or 18.1 percent, excluding the impact of
expenses incurred to improve organizational effectiveness, according to
"While there's more to do to fully reposition us on the cost side, we
continue to reduce our operating expenses across the board as well. Operating
expenses were down 15 percent and were 14.2 percent as a percent of revenue. In
Q1 alone we cut operating expenses $101 million and reduced them $312 million
from last year," Gladden said.
about "head count" at Dell, Gladden responded, "We're not
going to release head count information during the course of the year. We're
focused on taking cost out, not on head count."
Under the category of "Consolidated Operating Income," however,
severance and facilities closure expenses were estimated at $185 million, up
from $134 million the previous quarter and $106 in the same quarter of the
previous fiscal year.
In a change of protocol, Dell now reports its revenue and operating income in
four global customer segments: Large
Enterprise, Public, SMB (Small and Medium Business) and Consumer.
No segment significantly outperformed the others, although the Large
Enterprise segment performed the most strongly, contributing 27 percent of
Dell's net revenue, followed by Public with 26 percent, SMB with 24 percent and
Consumer with 23 percent.
As for Dell's offerings, the Mobility
segment accounted for 32 percent of Dell's net revenue, and other top
earners were Desktop PCs, contributing 26 percent, and Software and Peripherals
with 18 percent.
"We hope during the second half of the year we [will] start to see some
improvement, and into the next fiscal year, even more," Gladden said.
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.