Dell had a strong first quarter, thanks to enterprise sales, and it announced plans to invest $1 billion in cloud systems. Tablets, however, hurt its consumer PC sales.
business customers of No. 2 PC maker Dell helped the company finish its fiscal
2012 first quarter ahead of estimates, with net income of $945 million on
revenue of $15 billion. While the revenue figure was up 1 percent from a year
ago, net income was up 177 percent.
tablet sales cut into PC sales
across the industry during the quarter, and
for Dell there was no exception, with revenue in its consumer sector falling 7
percent. Its large enterprise and small and medium business categories saved
the day, however, with the former posting record income of $504 million-up 5
percent from a year ago-and the latter posting record profit, up 7 percent to
very enterprise-focused two-pronged strategy-"accelerating investment in
enterprise solutions and services and improving execution in core client
businesses"-is paying off, Dell CFO Brian Gladden said during a May 12
conference call with media and industry analysts.
is also focusing on three domains-next-generation computing solutions;
intelligent data management, services and security; and cloud computing
offerings-and to this end has made strategic acquisitions over the last year.
Going forward, it plans to remain laser-focused on the enterprise, with an
allotted $1 billion slated for cloud capabilities, and to add "significant
numbers of new engineering, development and solutions-based sales resources in
the U.S. and globally to support its enterprise solutions and services
focus," Dell said in a statement.
Business Research (TBR) analyst Greg Richardson, in a May 17 report, applauded
Dell's use of its traditional PC business to extend itself deeper into
enterprises as well as to reposition itself.
the purchases of Compellent, SecureWorks, Boomi and KACE, Dell has
inorganically positioned itself to take on competitors such as IBM and HP, who
can address large-scale buildouts of integrated hardware and software with
their services and software portfolios," wrote Richardson. "By
offering hardware and software that enabled the development of virtualized
environments, as well as design, implementation and support services, Dell further
positions itself as a solutions provider."
added that Dell, which has traditionally worked alone, has done "an
about-face" in working with channel and service partners and designing
solutions that enable partners to gain revenue by attaching services to Dell
creating solutions for its longtime customers in verticals such as health care,
education and the public sector-Dell executives on the call repeated that
they've been having "deeper conversations with customers about their tech
challenges and opportunities"-the company also plans to address new
expect Dell to go outside its comfort zone in coming quarters, targeting
vertical expansion in key industries such as financial services and
telecommunications, and strengthening its position in the services and security
markets," wrote TBR's Richardson.
too, is positive about the coming quarters, and offered second-quarter guidance
of 5 to 9 percent, which it acknowledged is slightly above the norm and
attributed in part to stronger spending among state and local government and
education customers as they close their fiscal years.
the topic of tablet sales, which are lumped together with PC sales these
days-CEO Michael Dell described the disconnect between tablet sales and an
enterprise focus, explaining that in all instances Dell has looked into, the
tablet is a third device-coming after smartphones and PCs-"and you can't
find a lot of companies that are going to have three devices for all of their
Gartner and other firms are forecasting gangbuster tablet sales, which very
well may happen, Dell added, "We're not seeing tablets replacing the
smartphone or the PC in large numbers in organizations."
day before, Dell competitor
Hewlett-Packard reported modest gains
for its fiscal second quarter, which
ended April 30. CEO L??Â«o Apotheker pointed to sales of tablets and phone
devices, particularly from Apple and Samsung, saying they're noticeably cutting
into its PC business. He also added that HP was focusing more on services, and
will be accelerating efforts to "align our services business model to our