Dell On Earnings Call: Revenue May Be Down, But Product Refresh Is Coming
The world's second largest maker of personal computers saw ongoing signs of stabilization in the economy even though its profits and revenue were down year over year. However, Dell said he expects the second half of the year to show better performance than the first.
Pointing specifically to the strength of its enterprise portfolio, Dell said the company plans to continue its push into the enterprise and data center solutions while preparing for a strong refresh cycle based on the impending release of Windows 7, Office 2010 and Intel's Nehalem processor.
"If current demand trends continue, we expect revenue for the second half of the year to be stronger than the first half," said Dell, the company's founder and chief executive, in a statement. "We are expanding our capabilities in enterprise technology and services and investing in our core business to distinguish Dell both with customers and in operating performance."
The company reported revenue for the fiscal second quarter 2010 of $12.7 billion, down 22 percent from $16.4 billion in the second quarter of 2009. It posted posted $472 million in profit in its second quarter, down 23 percent from $616 million from the same quarter in the previous fiscal year. Diluted earnings per share for Dell's second quarter were $.024, down 23 percent from $0.31 a year ago.
The Round Rock, Texas-based computer maker pointed to its Equal Logic storage line as a particularly bright spot in its second-quarter earnings report, noting that the release of the PS4000 storage array helped lead to 42 percent revenue growth even with the company's overall storage revenue dropping 20 percent.
"The Equal Logic platform is a big one for us," said Dell. "Certainly we're attracted by having our own [intellectual property] and [the] profit that brings us."
In fact, the Equal Logic platform will likely be the leading edge of Dell's push into the data center over the second half of 2009 and into 2010.
"Data center virtualization will be a high priority," said Dell. "We're gaining share in servers and storage. Now we're building the right solution portfolio so that we can win in data center."
In addition, Dell said he sees the possibility for strong hardware sales in 2010 -- likely starting slowly but building as the year moves on.
"When I look ahead I see a powerful product cycle," said Dell. "With Nehalem from Intel, Windows 7 to replace many customers' XP machines -- a soon to be eight-year-old OS -- and Office 2010 will be a significant addition to clients' portfolio. Coupled with our progress in client and server virtualization, [it] will all add up to a powerful new product cycle going into calendar year 2010.
"Put Windows 7 and Office 2010 on a new machine and you'll love your PC again," he said.
Of course, there are risks associated with betting on a product that has not hit the market yet, but the company has a positive outlook from talking to customers, Dell said.
"Our field teams talk to CIOs and this is what we are hearing," he said. "It's not 2010 yet and there are risks, but everything we see right now says it is quite positive."