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By | Rik Myslewski 28th May 2009 22:55

Dell profits down, hopes up

Meltdown's bottom not yet certain

As is true with most every tech company during the ongoing meltdown, Dell announced Thursday that its just-finished fiscal quarter saw shrinking revenues and income.

Despite some ugly numbers, the company's chairman and CEO Michael Dell predicts better days ahead - although those days may not arrive for some time.

During Dell's first quarter of fiscal year 2010, which ended May first, the company's revenue fell 23 per cent to $12.3bn (£7.7bn) from the $16.1bn (£10.1bn) it pulled in during the same period last year, and down 8 per cent from the previous quarter's $13.4 (£8.4bn).

Profits sank even more. Q1 2010 net income was $290m (£182m), down a whopping 63 per cent from the $784m (£492m) reported during the same period last year, and down 17 percent from the previous quarter's $351m (£220m).

Michael Dell, however, has high hopes for both server and client sales next year. After pointing out that his company "at last count" had a 37 per cent share of x86 server units, he reminded the analysts and reporters listening in on a conference call that although corporate sales are currently being deferred, "The thing I'm hearing is that they're planning on a pretty big 2010 client refresh."

One reason: "They're planning around Windows 7 - they passed on Vista." He believes that IT departments will focus on technologies such as virtualization, wireless, mobility, and "hoteling" - meaning providing workers with temporary workspaces at corporate sites into which they'll bring their own or company-supplied notebooks.

Dell also said that those workers will push for new machines. "Users are getting restless as their machines get to the fourth or fifth year. At home they have a brand-new product that has the latest operating system, the latest capabilities. That can't go on forever."

And although Dell's SVP and CFO Brian Gladden said "When taking the entire quarter into account, we don't think there's enough momentum to call a bottom yet," Michael Dell was clear that he's not planning to wait until that bottom is unmistakable before he gets aggressive. When asked about the company's plans for emerging markets, for example, he said, "The word that comes to mind is 'attack'."

The question, of course, remains whether those markets - primarily the "BRIC" countries of Brazil, Russia, India, and China - will have enough reals, rubles, rupees, or yuan to make that attack pay off. ®

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