Dell profits take dive

By Allie Coyne on May 23, 2012 10:11 AM
Filed under Hardware

Transition hits bottom line.

Dell suffered a 33 percent decline in its first quarter financial results, posting a net income drop of $US310 million ($A317m) compared to the same period in 2011.

The company today reported net income of $US635 million for the quarter, down from $US945m in first quarter 2011.

Overall sales also dropped from $US15 billion in the previous corresponding quarter to $US14.4 billion.

Dell’s consumer business was the hardest hit, a result of the company’s move to reposition itself as an enterprise services and solutions provider. Sales were down 12 percent from the same period a year ago to $US3bn.

Dell also experienced a decrease in revenue from its large enterprise and public sector businesses of three and four percent respectively.

Large enterprise contributed $US4.4 billion in the quarter while public revenue came in at $US3.5 billion. 

Buoyed by a renewed focus amid a significant marketing campaign, Dell’s enterprise solutions and services division grew 2 percent to $US4.5 billion in revenue, half the company’s gross margin.

Services on their own contributed $US2.1 billion in sales, a 4 percent jump from Q1 2011, while storage grew 24 percent and attracted $US423 million in sales. 

"We’re committed to continuing our strategy to re-shape Dell’s business as an end-to-end IT provider,” CEO Michael Dell said in a statement.

“We saw continued progress in our first quarter with the innovative IT solutions we’re providing – notably our latest Dell servers, storage, networking and services that deliver customers enhanced productivity.”

Dell expects second quarter revenue to be up between two and four percent sequentially quarter-on-quarter.

 
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