Dell results up amid good figures across the industry

By Martin Courtney
20 Aug 2010 View Comments
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Michael Dell
The positive results will please beleaguered founder Michael Dell

Computer giant Dell released its latest quarterly figures last night, announcing a 22 per cent revenue increase year on year to $15.53bn (£9.96bn), beating analyst predictions.

The company put the results down to the worldwide increase in customer demand for Dell enterprise solutions, including servers and networking systems, storage and services.

Further reading

This week also saw Dell announce its proposed acquisition of enterprise storage specialist 3Par in a $1.15bn deal.

The move is designed to boost Dell's ability to sell cloud computing and datacentre infrastructure to high-spending corporate and service provider customers, helping it to compete with bigger rivals such as HP and IBM.

On the downside, 3Par has yet to make a profit – it posted a net loss of $959,000 for the fiscal year 2009, with revenue totalling $185m – so adds nothing to Dell's immediate financial wellbeing.

And Dell already resells storage kit made by 3Par rival and storage giant EMC, a partnership which may come under pressure when the deal goes through.

The positive financial results will be welcome for Michael Dell, the company's founder and serving CEO, after a quarter of Dell's 1.5 billion shareholders withheld support for his re-election as director last month.

Two US labour groups urged shareholders to vote against Michael Dell, citing the company's settlement of fraud claims with the US Securities and Exchange Commission (SEC) on 22 July this year.

The SEC alleged that Dell had failed to disclose exclusivity payments from Intel – monies paid to ensure that Dell did not use chips manufactured by Intel rivals – in its financial statements, making it appear that it was meeting analyst profit estimates.

Dell executives did not admit to any wrongdoing but the company agreed to pay a $100m penalty, with Michael Dell personally paying an additional $4m.

Other PC and laptop manufacturers' financial results have improved markedly over the past 12 months.

Lenovo's profit rose to $55m compared with a loss of $16m for the first financial quarter in 2009. Revenue grew 50 per cent to $5.2bn as the company focused on building lower-cost laptops to sell in emerging markets and ramped up its mobile phone business.

IBM saw net income for the financial quarter ending 30 June increase nine per cent to $3.4bn, with HP's second-quarter earnings up 28 per cent to $2.2bn year on year.

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