Dell does exceedingly well in Q1

IT spend stable

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Dell continues to dramatically outperform industry rivals, with shipments up 29 percent during fiscal Q1, even as industry volumes sank 1 per cent.

For the quarter ended 2 May, Dell said the strongest growth in worldwide shipments came outside the US, with 29 percent growth in the EMEA region, and 40 percent in Asia-Pacific and Japan.

The company, which started off life as a PC maker but has since diversified into products including servers, storage, handheld computers and printers, continued to attribute its strength to its low-cost, direct sales model, which it says industry peers have not replicated. Dell said it gained more than a full point of worldwide market share in the quarter, reaching 17.2 per cent.

First-quarter net income was USD598 million, or USD0.23 per share, on revenues of USD9.532 billion, in line with analysts' expectations. These numbers represent revenue growth of 18 percent over the same period last year, while net income soared 31 percent and earnings per share jumped by 35 percent.

In a conference call with analysts on Thursday, the company's Chief Operating Officer Kevin Rollins said that Dell's new own-branded printer business was "off to a fast start, with results that are two times our internal demand projections." He said Dell will introduce a new wave of printer products in the coming months, but he noted that printers represent a longer-term growth play for the company and were unlikely to have any short-term effect on the company's financial performance.

Rollins told analysts that Dell believes the IT spending environment is stabilising, but that there has been no noticeable increase in requests for proposals (RFPs) from corporate customers seeking to re-start spending.

"There are a lot of companies that are doing refreshes and replacements and we are winning new, large global accounts all the time. We have not really seen a big uptick in RFPs," he said. "I think that is why we basically said the market is stable, but no signs yet of huge upswings."

But Rollins added that the importance of the US corporate market, and the question of whether demand is resurging there, has probably been over-emphasised by the media, as US corporates represent just 15 percent to 20 percent of Dell's overall business, which also includes the government, education and SME sectors as well as international corporate customers.

Looking ahead to the fiscal second quarter, Dell said it expects revenue to rise approximately USD200 million to more than USD9.7 billion, with earnings per share of USD0.24. © ENN


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