Feeds

Server rebound, Perot services boost Dell

PCs, not so much, in fiscal Q1

Beginner's guide to SSL certificates

The x64 server rebound has been finally confirmed with Dell reporting its financial results for its first quarter of fiscal 2011 ended April 30. Dell's overall revenues were up 21 per cent, to $14.9bn, and net income was up 52 per cent, to $441m.

These numbers may not have been high enough to make us forget that Wall Street crashed again on Thursday because of the instability in the global economy, but they do confirm that companies are again willing to spend something akin to normal amounts on IT.

In the first quarter of its current fiscal 2011, Dell's product sales came to $12.1bn, up 18 per cent and nearly identical to what the company sold in the fourth quarter of its fiscal 2010, which ended in January. Dell's services revenues were up 32 per cent to $2.79bn, with most of the growth coming from its acquisition of Perot Systems last year. Services revenues were nearly a carbon copy of last quarter as well.

This is unusual, but good, given that the fourth quarter is usually a pretty good one and the first a weak one. Because of all the new chips coming out, Dell has had to jack up research and development spending to $167m, which is a tiny amount compared to IBM, HP, and Oracle, and something that these three will no doubt point out. But it is 18 per cent more than Dell spent a year ago, and the company is doing more.

Dell's server and networking business, which is mostly servers, was the star of the quarter in terms of organic growth, with revenues rising 39 per cent to $1.78bn, although this was a one point decline from the prior Q4. Still, Dell's server biz showed real growth compared to the same quarter two years ago, when the economy was already slowing thanks to the Great Recession, selling only $1.65bn in servers, up a meager 4 per cent compared to Q1 fiscal 2008,which ended in May 2007.

Dell arguably went south quicker than HP and IBM in the server racket, and while its growth and volume were nowhere near what HP reported earlier this week — revenues for ProLiant and BladeSystem x64 servers up 53.6 per cent to just a tad over $3bn — Dell is no slouch and its growth matched IBM's 36 per cent growth in its own Q1 and represented roughly twice as much revenue.

The x64 server recovery is underway.

Dell's storage business, on the other hand, is problematic — and you can't blame its acquired EqualLogic line, which had a 75 per cent revenue explosion in the quarter. Clearly other PowerVault products are suffering. Dell's software and peripherals business, which includes the resale of operating systems for servers and PCs and office automation and other software for PCs, had a more muted revenue boost of 11 per cent, resulting in $2.5bn in revenues.

The PC business, while improving, is not growing at the same rate as the server business. Dell's mobile PCs accounted for $4.56bn in revenues in the quarter, up 18 per cent, while desktop PCs accounted for $3.85bn, up 13 per cent. HP had slightly bigger and faster-growing notebook sales in its Q1, but Dell has slightly larger desktop PC biz, but one that is growing at half the rate of HP's.

Yes, I realize that HP's quarter ended in April and Dell's in May, so those numbers are apples to applesauce. The point is that Dell is not getting a licking in PCs — it's more or less doing as well as HP, and is no doubt looking forward to more of the same in the quarters ahead.

By customer set, Dell's consumer business accounted for $3.25bn in sales, up 16 per cent, with a 20 per cent boost in shipments across all products. But the consumer biz only delivers $17m in operating income. Small and medium businesses made up $3.52bn in revenues in the first quarter, up 19 per cent and yielding $313m in operating income; large enterprises comprised $4.25bn in sales, up 25 per cent, and delivered $283m in operating income. Neither SMBs nor large enterprises have recovered to their pre-recession levels yet. The public sector (governments and educational institutions) accounted for $3.86bn, up 22 per cent, in the first quarter, with $298m in operating income. Dell's public sector business was never hit as hard as Dell's commercial businesses during the Great Recession.

Dell had $5.6bn in net cash as fiscal Q1 2011 ended. Acquisitions will probably be small, if it does any.

The company did not provide specific guidance in its financial results for the coming quarters, but did say that it believes it is seeing the "early stages" of an IT refresh among corporations and therefore expects to see demand among commercial enterprises build throughout the year. The second quarter will, however, only see a "sequential demand pickup in the low single digits," and that means that basically Q2 will look a whole lot like Q1 fiscal 2011 and Q4 fiscal 2010. ®

The next step in data security

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.