Servers, Storage Drive Big Gains for Dell

In reporting a 20 percent revenue increase over the same period a year ago, Dell CEO Kevin Rollins says the company "touches the market directly" with a business model that keeps it tuned in with customers.

Dell saw revenues and income jump sharply during its second fiscal quarter, fueled in large part by sales of its enterprise servers and storage devices.

The Round Rock, Texas, company generated $11.7 billion in revenue during the quarter ended July 30, a 20 percent increase over the same period a year ago. Dells net income rose 29 percent, to $799 million, the company announced Thursday. Enterprise systems and storage accounted for 22 percent of overall company revenues, tying a record at Dell.

Dell Inc.s earnings, particularly in its enterprise business, contrasts with news released earlier Thursday by rival Hewlett-Packard Co. Although the company saw overall revenue grow 9 percent to $18.9 billion and most of its business units do well, it said its enterprise systems and storage unit struggled, posting a $208 million loss.

/zimages/6/28571.gifClick here for more on HPs results.

While not addressing HP directly, Kevin Rollins, Dell president and CEO, said his companys financials were the result of its direct business model, which he said keeps it in closer touch with its customers and enables it to run more efficiently.

"Dell is a profoundly different company from other companies, with a different business model, a different strategy and different … results," Rollins said during a conference call with reporters.

"The Dell direct business model is different from anyone else. We dont go through middlemen. We touch the market directly," he said.

Overall, Dells global shipments jumped 19 percent, and shipments of its Intel Corp.-based servers grew 31 percent. Sales of Dell/EMC Corp. storage devices spiked 36 percent, and revenue from software and peripherals—fueled in large part by Dells new printer business—rose 31 percent.

/zimages/6/28571.gifRollins recently took over the CEO position from founder Michael Dell, and the company last month upped its second-quarter outlook. Click here to read more.

Rollins said he expects the printer business to continue growing now that the company is branching beyond the consumer-targeted ink jet printers and into the more-enterprise laser jet space.

In response to several questions, Rollins said he has not seen the slowdown in IT spending that other companies have referred to recently when discussing disappointing earning results. That is further validation of Dells business plan, he said.

"The market should not value every technology, should not value every company, should not value every sector all the same," he said.

Looking forward, Rollins said Dell expects shipments to grow 21 percent in the current quarter, with revenue coming in at about $12.5 billion, which would be an 18 percent increase over the same period in 2003.

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