Dell: Still a work in progress; Sees conservative IT spending

Dell: Still a work in progress; Sees conservative IT spending

Summary: Dell's fourth quarter results fell short of expectations Thursday and the company "will continue to incur costs as it realigns its business to improve growth and profitability." Meanwhile, Dell said future results "could be adversely impacted by more conservative spending by its customers.

SHARE:

Dell's fourth quarter results fell short of expectations Thursday and the company "will continue to incur costs as it realigns its business to improve growth and profitability." Meanwhile, Dell said future results "could be adversely impacted by more conservative spending by its customers."

Simply put, Dell is still a work in progress and it's unclear when the company will be firing on all cylinders. For the quarter ending Feb. 1 (preview, Dell statement), Dell said net income was $679 million, or 31 cents a share, on revenue of $16 billion. Excluding charges Dell had earnings of 34 cents a share.

According to Thomson Financial, Dell was expected to report fourth quarter earnings of 36 cents a share with revenue of $16.26 billion. Some analysts had expected Dell to miss estimates with earnings of 35 cents a share, but Dell missed that target too.

For the year, Dell reported earnings per share of $1.31 a share on revenue of $61.1 billion, up 6 percent from a year ago. In a statement, CEO Michael Dell said the company is executing against its plan. However, thus far those plans aren't enough to deliver the results Wall Street wants.

Here's the fourth quarter by the numbers:

  • Dell has laid off 3,200 workers over the last eight months;
  • Sales outside the U.S. represented 49 percent of the company's sales. So called BRIC countries (Brazil, Russia, India and China) had revenue growth of 36 percent.
  • Notebook revenue was up 24 percent to $4.8 billion with unit shipments up 37 percent. Services revenue was up 7 percent to $1.4 billion.
  • But servers and networking revenue was up 2 percent from a year ago to $1.6 billion. Storage revenue was up 2 percent from a year ago at $600 million. Desktop PC revenue was up 2 percent to $4.9 billion. Software and peripherals revenue was up 15 percent from a year ago to $2.7 billion.
  • Days supply of inventory was 8.
  • Dell ended the quarter with a total headcount of 88,200 of which 82,700 were full-timers.

Topics: Dell, Banking, Enterprise Software

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

9 comments
Log in or register to join the discussion
  • Vista alone was not quite enough.

    The combined total of notebooks and desktops gained $1 billion, from $8.7 billion to $9.7 billion. That's an increase of 11% on 60% of the company's revenues.

    Not bad. If the Vista gains could have been matched on the rest of Dell's product lines, the company would be a major success story.

    But don't count Dell out. Vista SP 1 will be arriving soon, and the companies that wait for the first Service Pack will be out in force.
    Anton Philidor
  • What's driving enterprise upgrades?

    Most office worker job tasks can be done on legacy hardware. The performance of older machines is more than adequate. Combined with a lack of compelling value in Vista and it should be no big surprise hardware sales are anemic.

    When the economy slows down, businesses will put off upgrades. When the upgrades weren't that compelling in the first place it's even less of stretch.

    Same trend in the server room. I'm seeing a lot of PHP jobs coming in lately. Few of the apps are more than two years old. Again, legacy hardware delivering ongoing value carrying a LAMP stack.

    Then there are those solid state appliances like the eee PC. Those provide 90% functionality for most users. The high end of the PC spectrum is becoming a smaller slice of the overall PC market. You just don't need a quad core for productivity tasks. Unless you're doing a lot of video work, CAD or gaming then legacy hardware can still carry the load.

    None of that is good news for Dell. Not now and not for the future.
    Chad_z
  • All business is a work in progress...

    So much for insightful reporting... :(
    Narg
  • Doing it to themselves...bargin basement brand

    I had always considered getting a Dell but after they started saying they'd sell them in Walmart with Linux on them I started to have visions of the cheap crap you used to be able to buy in discount stores. Smart consumers would never buy those cheap items and so since that announcement I won't even consider buying a Dell. If it has had that effect on me, I'm certain it has had that affect on others. There is such a thing as perceived value and if the consumer thinks they are the bargin basement computer company, you want to buy something a bit better. After all, how many people opt for the cheap KIA cars? I think most still prefer something perceived to be better despite the cost such as GM, Ford, Toyota, Honda etc...
    GeiselS
  • Simply Put: Our computers are GARBAGE

    That's about it. We make crap and dupe people into buying them.

    The last one out will need to shut the lights off.
    itguy08
  • How I find virus

    I have striped drives.I think that computer virus do not like striped drives.I use the Panda beta virus scanner.I surf the web for porn.Some of these porn pages are constructed in such a way as to hail virus out of your computer I suspect that this could be a Federal design here.I click out all of the file hide stuff in Windows and search the Local Disk C:Drive,Windows,Programs and System 32 folders for unusual files,files that were not there prior to surfing.I send these files to Panda using Services--Send Suspected Files--section.When on the Internet files can only appear in the Temporary Internet Files folder.In porn you're now in hacker heaven,you'll see it.The fire wall shuts off and the computer has to be restarted because Panda disappears.I keep going until the computer freezes up.Then I use Windows Restore to get it all back.It's a messy job but somebody has to do it!
    BALTHOR
  • No deal for Dell in our shop

    They burned their bridges with us over three years ago and won't be back. Upgrade cycle for desktops is now out to 48 months, we replaced he last of our CRT-based systems in 2007. Vista is not on the roadmap until late 2009, could be delayed even further. My boss calls it a video game instead of an operating system.

    Curious note: most of the people who requested replacement of their PCs in the last two years actually wanted replacement of either the keyboard, mouse, or video display. A couple of them wanted more local disk space, so we dropped in secondary HDDs. Nobody came in saying that their computer was too slow or did not run some application because it was too old.

    So, keep a stock of spare keyboards and mice, and you may use the current crop of desktops for the next 6-8 years!
    terry flores
  • RE: Dell: Still a work in progress; Sees conservative IT spending

    We used nothing but Dell machines here and at remote locations. Unfortunately that has now become "Anything" but Dell. We just couldn't apease users that came to us with complaints that they got a desktop with a graphics card that the power supply couldn't handle; that kind of thing. Just too much slop without enough English-speaking "service" personnel (re: complaint department).

    We are done with Dell.
    d@...
  • Dell lose another customer - me!

    Well, to add to their woes, Dell just lost themselves another customer - me!
    I ordered a couple of systems in 2007 - no problem! Just tried to order a laptop - but no dice - wouldn't let me check out ("page temporarily unavailable").
    Seems they have changed their business model and I have been pushed off to a re-seller. But Dell didn't bother to let me know, and the re-sellers don't seem any too sure that they are actually Dell re-sellers.
    Not quite what I expected - so I'm off to Lenovo ...

    Feline
    Feline257