Putting the Focus on

By John G. Spooner  |  Posted 2006-02-17 Print this article Print

Enterprise Products"> During the quarter, Dell shipped more than 10 million units, sorted out its U.S. consumer PC business and saw corporate sales in its Americas region increase as well. "We think weve got [the U.S. consumer PC business] in good shape now and that our consumer business is healthy," Rollins said. "The focus, now, is on our enterprise products."
Overall, sales in the Americas were up 10 percent year-over-year. Corporate revenue in the United States, including SMBs (small and midsize businesses), increased 12 percent year over year, Dell said.
However, much of the companys quarterly upside came from sales of products outside of the United States. Dell, which said it shipped over 100,000 servers in a quarter in Europe for the first time during the fourth fiscal quarter, said business outside the United States jumped 21 percent year over year for the quarter. A company record of 43 percent of Dells revenue came from outside the United States during the period, up from 40 percent in its third fiscal quarter 2005. The upswing in non-U.S. business is inspiring a greater international focus from Dell, which continues to seek growth in areas such as Europe and Asia. Dell executives said they believe the company can increase its sales at twice the industry pace in Asia and Japan, for example. Dells Asia Pacific and Japan region saw revenue increase by 21 percent and units jump 27 percent year over year during the quarter. Dells China business grew units 28 percent year over year, the company said. Dell will increase its workforce in those areas as well, leading to an increase in workers based outside the United States. The companys practice has been to locate its operations, including PC factories, close to its customers. Thus, while it has opened a new U.S. plant in North Carolina, it has also added a second plant in Xiamen, China. It also intends to build a plant in India within the next couple of years, Rollins indicated. Dell and Cisco team on an Ethernet switch for Dell blade servers. Read more here. "With only 10 percent market share in Asia and 11 percent in Europe…you can see the growth opportunities [in those markets] are more pronounced than in the United States," where Dells share is about 32 percent, he said. "Thats not going to be a shift in the work force. Its going to be an acceleration of the growth … [However,] I think Asia jobs will grow faster than U.S. jobs and so that may look like a shift." The company tempered its first-quarter fiscal year 2007 outlook a bit, calling for revenue of between $14.2 billion and $14.6 billion and earnings per share of 39 cents to 41 cents, before accounting for stock-based compensation. The forecast, which accounts for the typical seasonal slowdown seen between the fourth calendar quarter and the first calendar quarter of the following year—and in addition, Dells fourth quarter included an extra week, giving it a revenue pop—disappointed some, London-based news service Reuters reported on Feb. 17. "The guidance for the April quarter is disappointing," Reuters quoted Cindy Shaw, an analyst at Moors & Cabot Capital Markets, as saying. "It suggests that revenue growth will slow further." Rollins said the guidance was appropriate, given seasonal trends, the shorter quarter and Dells own size. "Were not seeing any other factors," he said. Check out eWEEK.coms for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.

John G. Spooner John G. Spooner, a senior writer for eWeek, chronicles the PC industry, in addition to covering semiconductors and, on occasion, automotive technology. Prior to joining eWeek in 2005, Mr. Spooner spent more than four years as a staff writer for CNET News.com, where he covered computer hardware. He has also worked as a staff writer for ZDNET News.

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