Infrastructure // PC & Servers
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5/21/2010
12:35 AM
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Dell Profits Up 52% On Strong Business Sales

The computer maker reported a 38% rise in revenue from servers, storage, and services sold to businesses and increased sales across all its customer segments.

Dell, which has struggled more than Hewlett-Packard and other rivals in weathering the economic recession, has reported a 52% jump in profits in the first fiscal quarter, as businesses ramped up spending on PCs.

The computer maker on Thursday reported that net income for the quarter ended April 30 rose to $441 million, or 22 cents a share, from $290 million, or 15 cents a share, the same period a year ago. Revenue increased 21% to $14.9 billion from $12.3 billion a year ago. Dell's results were ahead of Wall Street analysts polled by Thomson Reuters.

A key driver behind Dell's performance was a 38% increase in revenue from servers, storage and services sold to businesses. During the recession last year, companies delayed PC purchases, which hurt Dell more than HP and other competitors that managed to make up some of the shortfall with consumer sales.

This time around, however, Dell reported increased sales across all its customer segments, led by large enterprises, 25%; and government, 22%. Consumer sales were up 16% and revenue from small and medium-sized businesses rose 19%.

"This quarter was highlighted by good execution in an improving economic environment," Brian Gladden, chief financial officer for Dell, said in a statement. "We feel good about the growth across our commercial business as it approaches nearly $50 billion in revenues. We will continue to make investments in our enterprise solutions throughout the year."

Looking to the second fiscal quarter, Dell said it believes corporations are in the "early stages" of replacing aging servers, desktops and laptops The company saw demand build in the first fiscal quarter and was "optimistic" the trend would continue throughout the year.

Dell expected higher sales from its government, consumer and education businesses in the second fiscal quarter, said demand from large companies in the U.S. and Europe is typically lower in the second and first part of the third fiscal quarters.

Overall, Dell forecast a revenue increase quarter-to-quarter in the low single digits in the second fiscal quarter.

Dell reported earnings two days after HP said profits in the April quarter rose 28% year-to-year to $2.2 billion, or 91 cents a share, as revenue grew 13% to $30.8 billion. HP also reported increased spending on PCs by consumers and businesses in an improving economy.

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