Dell's profits rise on healthy enterprise sales

A successful quarter in servers, services and mobility has helped Dell beat Wall Street targets, as the company bets on businesses refreshing their IT
Written by Jack Clark, Contributor on

Dell has reported a 16-percent jump in its second-quarter profits year-on-year, saying that it expects sales to continue ticking up, thanks to government and business contracts.

On Thursday, the world's third-largest PC vendor announced second-quarter income of $545m (£351m), or 28 cents a share, on revenue of $15.5bn, up 22 percent year-on-year. Non-GAAP earnings were 32 cents a share, two cents ahead of Wall Street estimates. Profit increased 60 percent compared with the first-quarter total of $341m.

Dell's business wings demonstrated major growth, with large enterprise revenue up 38 percent on strong growth within servers, services and mobility. Small and medium-size business (SMB) revenue rose 25 percent with boosts coming from sales of SMB servers, networking, storage, desktops and mobility products.

"We continue to strengthen our portfolio of datacentre solutions at an aggressive pace with the addition of key IP [intellectual property], talent and technology. This quarter's results are a strong reflection of the progress we've made," said chief executive Michael Dell in a company statement.

On Monday, the chief executive received a knock at Dell's annual shareholder meeting. In a ballot to select the board of directors, about a quarter of votes — almost 380 million out of 1.5 billion — were withheld against Michael Dell's nomination.

In July, Dell paid $100m to the US Securities and Exchange Commission (SEC) to settle charges that alleging the company had violated federal securities laws in its accounting practises. The SEC had also made explicit allegations against Michael Dell himself, alleging he had failed to provide proper disclosure with regards to the company's commercial relationship with chipmaker Intel.

Dell said its future growth will come from technology within the enterprise. Its $1.15bn plan to acquire virtualisation-friendly storage company 3Par are emblematic of "Dell's commitment to build its capabilities for open and affordable enterprise solutions", the company said.

In particular, Dell pointed to the corporate IT replacement cycle as a source of growth. For the next quarter, the company expects a slight increase in federal government and commercial business sales. For the next year, it anticipates revenue to increase between 14 and 19 percent and non-GAAP operating income to rise between 18 and 23 percent.

Editorial standards