Feeds

Dell is beat by The Street

Awaits Win7 bonanza

Boost IT visibility and business value

Dell released its financial results for Q3 ended 30 October on Thursday, and for its troubles, it took a beating in after hours trading.

The good news is that the company remains profitable. The bad news is that those profits have sunk 54 per cent since last year - and were 5 cents a share worse than analyst estimates.

And revenues were little to write home about, falling 15 per cent from last year to $12.8bn. Wall Street had forecast revenues of $13.2bn.

The contrast with arch-rival HP is striking. Last week, HP rushed out prelimary results for its fiscal Q4 to accompany news of its impending takeover of 3Com. Earnings per share is up on revenues down 8 per cent.

Net income is where Dell really took it in the chin. In 2008's third quarter - hardly a bountiful period itself - net income was $727m, but in the same quarter this year, it had shrunk by 54 per cent to $337m.

But Chairman and CEO Michael Dell told analysts and reporters on a conference call when discussing his company's third-quarter fiscal 2010 performance that he sees a Windows 7–infused glow on the horizon.

And he's not talking about Windows 7 Home Premium. Dell is talking enterprise. After all, as he said when discussing the disaster that was Vista, "I can't remember a time when a very high percentage of [IT managers] skipped an entire operating system."

Leapfrogging that unfortunate OS led to a lot of old hardware running old software. "What we remind them - and they know this - is that Windows XP is eight years old," Dell said. "These IT managers really know that they cannot extend the life of these client assets forever."

"Forever" should end next year, according to Dell. "The momentum we're seeing in the enterprise customers around client has nothing to do with Windows 7 at this point. We are seeing a pipeline of Windows 7 that's starting to build for enterprise customers really next year."

Next year can't come soon enough.

The company also found hope in the fact that enterprise sales are beginning to show signs of life - though, again, only slightly. Enterprise revenue was up four per cent quarter-on-quarter to $3.4bn on a one per cent improvement in shipments - although that revenue was down 23 percent from a year ago.

SMB revenue showed a marginally better improvement, with $3bn in revenue that was up five per cent quarter-on-quarter on a nine per cent improvement in shipments, and down a comparatively painless 19 per cent year-on-year. Compared, that is, with the moribund enterprise market.

But when a 19 per cent drop can accurately be described as "comparatively painless," it's time for some enterprise and SMB market stimulus. "Remember," as Dell's CFO Brian Gladden told the conference-call listeners, "our business is 80 per cent commercial."

Server sales are beginning to pick up for Dell, with revenue up 10 per cent and unit sales up one per cent quarter-on-quarter. But Dell and the rest of the hardware industry is waiting for Windows 7 to stimulate sales of a new generation of client desktops into the enterprise and SMB. ®

Build a business case: developing custom apps

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Mozilla's 'Tiles' ads debut in new Firefox nightlies
You can try turning them off and on again
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
TROLL SLAYER Google grabs $1.3 MEEELLION in patent counter-suit
Chocolate Factory hits back at firm for suing customers
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
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.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.