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Dell rides enterprise to 22% revenue jump

But margins shrink

fingers pointing at man

Dell revenues climbed 22 per cent to $15.5bn in the quarter ending July 30, thanks largely to increased demand among corporate customers.

Commercial business revenue increased 28 per cent to $12.7bn during the company's fiscal 2011 second quarter, and servers, storage and services revenue jumped 43 per cent to $4.3bn.

This translated to a 16 per cent jump in overall profit. “We continue to strengthen our portfolio of data center solutions at an aggressive pace with the addition of key IP, talent and technology," read a canned statement from Michael Dell.

"This quarter’s results are a strong reflection of the progress we’ve made, and we remain very focused on delivering the best possible solutions and services to meet our customers’ IT needs.”

But the company's gross margin — the per centage of revenue the remains after subtracting the cost of building its products — fell to 16.6 per cent, compared with 18.7 per cent during the same quarter last year. This is typically a key indicator of the company's health, and following its earnings announcement, Dell's share price fell more than one per cent in after hours trading.

The announcement comes just days after 25 per cent of Dell's stockholders withheld votes to re-elect Michael Dell to the company's board. Last month, both Dell the company and Dell the man settled US Security and Exchange Commission charges they failed to disclose information to investors and used fraudulent accounting practices to give the false impression they were meeting Wall Street earnings targets.

Dell's consumer revenue was flat during the quarter, coming in at $2.9bn, while large enterprise business jumped 38 per cent to $4.5bn and small and medium sized business revenue was up 25 per cent to $3.5bn. ®

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