Dell's Profit Up Despite Revenue Drop

By CIOinsight  |  Posted 11-17-2011

Michael Dell told eWEEK last August that his company is steering more aspects of the business toward the higher-margin enterprise markets. That strategy apparently is starting to make a difference on the bottom line.

Dell on Nov. 15 posted profits that were up 9 percent over the same period a year ago, despite banking only a small decrease in revenue. The company's third quarter fiscal year 2012 earnings report showed it brought in $15.4 billion, relatively flat from 2010.

However, despite the level-off in sales, Dell increased its net income by 9 percent to $893 million.

The Austin, Texas-based company missed its Wall Street consensus revenue target, but its gross margin came in substantially higher at 23 percent against an expectation of 22.5 percent. The company has executed better than expected in the face of HDD shortages due to flooding of manufacturing facilities in Thailand.

Enterprise Sales Up 13 Percent in Quarter

On the earnings teleconference, Dell executives said that enterprise hardware, software and services comprised 31 percent of its total revenue. Dell also said income from sales of servers and networking equipment grew 13 percent.

"Consistent with our strategy and the investments we have made, we continued to see excellent momentum in our enterprise business, with double-digit revenue growth in services, servers and networking, and in key growth countries, despite some macroeconomic uncertainty," CFO Brian Gladden said.


To read the original eWeek article, click here: Dell's Revenue Flat, but Profits Are Up