Feeds

Rare Dell critics spotted circling over Austin

Not extinct and inquisitive as all hell

  • alert
  • submit to reddit

Top three mobile application threats

For the first time in ages, the famed "Dell model" has come into question.

Analysts have started wondering if Dell can surge from $49bn in annual sales to $80bn within three or four years. Such a jump would require solid results from Dell's computer business and far above average growth from its server, storage, services and consumer products businesses. In a rare moment of Dell doubt, many pundits question whether Dell can get the growth it needs from these non-computer areas to reach the lofty $80bn goal. Delli management insists that the company can stretch beyond the computer game with ease.

"Our principal short-term concern around Dell has been that revenue growth expectations remain overzealous, particularly in light of what we believe will become an increasingly difficult market for PCs as 2005 progresses," wrote Sanford C. Bernstein & Co. analyst Toni Sacconaghi in a recent note. "Longer-term, we believe that Dell’s secular attractiveness is high, and despite its significant size, we estimate that the company can deliver double-digit revenue growth and 13-15% EPS (earnings per share) growth over the next six years, which places it among a select group of large cap technology growth companies. "

One of the more comic bits of baggage Dell carries with it is a history of phenomenal success. Analysts aren't arguing over whether or not Dell will grow - just by how much. This isn't "Will Dell be profitable this quarter or the next". It's "Can Dell meet its own dramatic target?"

The always sharp Sacconaghi nailed this question yesterday during Dell's analyst conference held in Austin, Texas and broadcast over the internet.

To reach the $80bn mark, Dell expects the vast majority of its growth to come from non-PC sales. In fact, these non-PC items will need to grow at twice the rate of Dell's PCs. We're talking about severs, storage boxes, printers, displays and handhelds. In addition, more than 55 per cent of Delli's growth will likely happen overseas, said CEO Kevin Rollins.

Sacconaghi wondered how such non-PC growth could change Dell's bottom line as dramatically as management suggests when current PC, notebook and related software and services account for close to 75 per cent of Dell's total sales, according to the analyst. Isn't Dell really more dependent on the PC market going forward than it would have the public believe?

"I agree with you . . . in that a lot of things are closely associated with the (PC) hardware that we sell," Dell's CFO Jim Schneider told Sacconaghi. "Yes, we have concerns of what the industry growth is over time."

Chairman Michael Delhi stepped in to emphasize a different point.

"There's no doubt that the client business is still very important to us, but I think the nature of the business is changing," Dell said.

PC sales aren't just PC sales anymore. They're door openers for software, services, peripherals and other more lucrative goods.

"The base client is less and less important, but still helps us originate these new activities," he added.

It's more and more obvious now why Dell pulled the 'Computer Corp.' out of its name and replaced it with 'Inc.'. The public shouldn't think of it as just a boring old box house. Dell is so much more than just the PC.

Application security programs and practises

Next page: We can see your PC

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Microsoft: We're making ONE TRUE WINDOWS to rule us all
Enterprise, Windows still power firm's shaky money-maker
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.