Dell: Q3 APAC decline due to biz transition

Summary:IT vendor says the region's 11 percent revenue dip this quarter is symptomatic of a business in transition, and believes its long-term, one-stop IT shop approach is already reaping benefits.

The Asia-Pacific region's performance for Dell in the third quarter proved to be a "mixed bag" given the revenue dips in key markets such as China and India. However, it downplayed the concerns by saying such declines were usual for a company in transition.

During an earnings call Friday, Amit Midha, president for Asia-Pacific and Japan at Dell, said the company continues to make great strides in terms of focusing the business more around software services and data centers , as well as higher value-add client products.

However, in terms of revenue, Asia-Pacific and Japan as a region fell 11 percent compared to last year and this was a greater dip than the Americas, which dropped 9 percent. Europe, Middle East and Africa suffered the most with a 15 percent decline, Dell stated.

Asia's performance was not helped by the slowing down of key markets such as India and China, which saw revenues dropping by 29 percent and 7 percent, respectively. Midha did note China was one of Dell's shining light in terms of sequential growth, but did not elaborate on the figures.

The company as a whole reported a 47 percent year-on-year drop in net profit to US$475 million in the three months ended October. This was on the back of an 11 percent dip in revenue at US$13.7 billion, it added.

Midha downplayed the performance, saying the current results reflected a company in transformation which was "very usual". "We are making good progress on all these [transitions]," he noted.

PC market challenging
The executive also played down the threat of Asian PC makers such as Lenovo, despite its declining earnings and market share in its desktop PC business .

"We continue to hear from customers and analysts this is the right strategy," Amit Midha, president for Asia-Pacific and Japan at Dell said, adding that customers will benefit from a single provider meeting all their IT needs at the end of the day.

Midha noted there was no question the PC market was challenging, especially in its core PC market, but pointed out a lot of the pressure it faced was industry wide due to a cut back in global IT spending and consumers increasingly using a mix of end-user computing devices.

One-stop shop brings security benefits
That said, he pointed to its server and software services businesses, which were gaining traction, as a validation of how Dell is building up its enterprise business to complement other product segments.

"We continue to hear from customers and analysts this is the right strategy," Midha said, adding that customers will benefit from a single provider meeting all their IT needs at the end of the day.

Security is one area that the one-stop shop approach will bring benefits to companies, he explained. Solving security issues cannot be done by being in just one business, and a company will need to be involved in the entire IT stack to help customers overcome such challenges, the executive added.

"Security issues are likely to aggravate in the coming times for our customers, and that's where we can help them to [improve] security and manageability issues with the portfolio that we're building," he said.

Topics: Hardware, Dell, PCs, Servers, Tech Industry

About

Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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