Tue May 17, 2011
Dell Profit Almost Triples In First Quarter
Round Rock-based Dell Incorporated, which employs about 16,000 people in Central Texas, reported first quarter profit of $945 million today. That compares to $341 million in the same period last year, an increase of 177 percent.
Shoppers are not exactly flocking to their local Best Buy to pick up a Dell. Consumer sales were down seven percent in the first quarter. But Dell is earning more profit from personal computers because components are cheaper to buy, and the company is shifting focus to “higher value products” like its Alienware brand of gaming computers. But even Dell’s largest competitor, Hewlett Packard, is reporting lower sales of PCs.
What really drove Dell’s quarter was growth in corporate business and cloud computing.
cNet News notes that Dell’s enterprise business now accounts for about 20 percent of its $15 billion in first quarter revenue.
Enterprise solutions and services revenue increased 5 percent, and storage and networking increased 11 percent. Corporate refreshes of PCs for employees helped push revenue from large enterprise PC sales up 7 percent. Small and medium business revenue also saw an increase of 7 percent.
Bloomberg News points out that Dell has benefitted as businesses upgrade old computers to new ones running Windows 7.
But Dell must continue to work hard to capture increased corporate services business as the economy recovers, reports the New York Times.
The company’s future, analysts say, continues to rest on its ability to provide services and equipment for large data centers as corporations increasingly rely on cloud computing, a phrase used to describe products and services delivered online.
Here’s some analysis from CNBC that came immediately after Dell reported earnings today.