Dell Earnings Fall, But CEO Sees Better Second Half - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Infrastructure // PC & Servers

Dell Earnings Fall, But CEO Sees Better Second Half

Sales to big corporations took the biggest hit, but consumer business fell too.

Dell on Thursday reported a 23% drop in net income in the fiscal second quarter, but company Chief Executive Michael Dell said he expects sales to improve in the second half of the year.

The computer maker said profits fell to $472 million, or 24 cents a share, for the quarter ended July 31. That's down from $616 million, or 31 cents a share, the same period a year ago. Revenue dropped 22% to $12.8 million from $16.4 million a year ago.

Dell's year-to-year results were an improvement over the fiscal first quarter, which saw profits plummet 63% from the year before and revenue fall by 23%. Quarter to quarter, sales rose 3% in the fiscal second quarter "amid stabilizing spending on information technology," the company said.

For the rest of the year, CEO Dell said sales trends were encouraging. "If current demand trends continue, we expect revenue for the second half of the year to be stronger than the first half," Dell said in a statement.

Within product categories, Dell took its biggest hit in sales to large corporations. Revenue in that category fell 32% from a year ago to $3.3 billion. Dell's consumer business fared better, falling 9% from a year ago to $2.9 billion.

Despite efforts to grow its services business, Dell remains primarily a computer maker. As a result, the company has been hit hard as PC sales in general have dried up globally in the economic downturn. However, Dell's expectations of a stronger second half is in line with projections from analyst firm Gartner, which expects growth in PC sales to resume in the fourth quarter following declines in the first three quarters.

Dell executives told financial analysts during a teleconference that the company is expecting companies and consumers who avoided Windows Vista and are still running the older Windows XP to start replacing their systems after Microsoft ships Windows 7 Oct. 22. The new OS, which unlike Vista has gotten strong reviews, coupled with an improving global economy is expected to boost sales. Within businesses, the replacement cycle is expected to start in earnest in 2010.

For the fiscal third quarter, Dell did not provide guidance, but said it expects "seasonal demand improvements" from the consumer and U.S. federal government businesses.

InformationWeek has published an in-depth report on why businesses shouldn't shrug off Google's upcoming Chrome OS. Download the report here (registration required).

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Slideshows
Reflections on Tech in 2019
James M. Connolly, Editorial Director, InformationWeek and Network Computing,  12/9/2019
Slideshows
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Commentary
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
Slideshows
Flash Poll