Dell's quarter solid on better component costs

Dell on Thursday reported solid second quarter earnings primarily driven by lower component costs, better pricing and enterprise sales. For the second quarter, Dell reported net income of $733 million, or 32 cents a share, on revenue of $14.

Dell on Thursday reported solid second quarter earnings primarily driven by lower component costs, better pricing and enterprise sales.

For the second quarter, Dell reported net income of $733 million, or 32 cents a share, on revenue of $14.8 billion. Operating income checked in at $896 million. According to Thomson Financial Dell was expected to report earnings of 30 cents a share on sales of $14.6 billion.

Details in the statement were sparse as Dell didn't provide an outlook and doesn't plan to hold a conference call. The company plans to restate its previous financial results and won't talk to Wall Street until it does. Oddly enough, CEO Michael Dell is chatty everywhere else. Dell is speaking at Citigroup's 14th annual Global Technology Conference Sept. 5 and seems to make the rounds at press events like the Vostro launch.

By the numbers:

  • The company had expenses of $102 million in the quarter for "incremental compensation expense related to payments for expired in-the-money stock options." Dell's accounting investigation cost $59 million.
  • Dell had 90,400 total employees with 83,300 of them full time. The remaining employees are temporary workers.
  • Americas revenue was $9.2 billion followed by Europe with $3.5 billion and Asia Pacific/Japan with $2.1 billion. In percentage terms, the Americas account for 62 percent of Dell's revenue.
  • Desktop PCs account for 34 percent of Dell's revenue followed by mobility products at 26 percent. Servers and networking comprise 11 percent with services accounting for 9 percent. Storage is 4 percent of revenue with software and peripherals accounting for 16 percent.
  • Server revenue was $1.6 billion in the second quarter and dell had a 32.7 percent market share. Storage revenue was $600 million.
  • Services revenue was $1.3 billion with software and peripherals revenue checking in at $2.4 billion.
  • Mobility revenue was $3.9 billion. Desktop revenue was $5 billion. Dell also addressed the company's problems with getting its color notebooks to customers.

During the quarter, the company ran a higher-than-normal product backlog, driven by better-than-expected demand for the new Inspiron and XPS color notebooks coupled with supply constraints for several colors, and a tightening in supply of certain flat-panel displays. The company believes the supply environment will improve in the second half of the year.