RealTime IT News

Dell Shatters Operating Records

Driven by strong enterprise sales of servers and storage systems, Dell Thursday reported revenues of $11.5 billion for the fourth quarter, or 18 percent higher than the same fourth quarter a year ago.

The Round Rock, Texas company, which competes with IBM, HP and Sun Microsystems in the enterprise, said in a press statement that performance was the company's best operating quarter ever, with record product shipments, revenue, income and earnings per share.

Net earnings were 29 cents per share, up 26 percent, while sales for 2003 totaled $41.4 billion. Operating income was $3.5 billion and per-share earnings were $1.01.

Kevin Rollins, the company's president and chief operating officer, attributed to the success to the company's unique low-cost business model. He also differentiated Dell's growth from rest of the PC-making pack, including IBM, HP and Gateway.

"Much of the industry's quarterly growth was at the low ends of the desktop and notebook categories, which offer little if any profitability," Rollin said in the statement. "Dell met its operating targets by pursuing profitable growth."

The profitable growth Rollins referred to is rooted in the enterprise, with servers and storage. Dell sold 40 percent more PowerEdge servers from the year-ago quarter, as well as 47 percent greater total storage revenue for the same period.

Server volumes rose 49 percent in the U.S., while sales from PowerVault and Dell/EMC storage systems are now at a $1.8 billion annual run rate.

Dell recently upgraded its Dell/EMC Clariion mid-range storage systems in conjunction with EMC's product refresh. Dell, which enjoys a fruitful partnership with EMC, is selling the upgraded Clariions branded as Dell/EMC CX300, CX500 and CX700. The CX300 is manufactured by Dell.

Revenue from software and peripheral (S&P) products rose 36 percent for Q4 and Dell's printers and accessories, LCD television/computer monitors, handheld devices and digital projectors accounted for nearly half of these sales.

Looking forward, Rollins said Dell expects first-quarter fiscal-2005 product shipments to rise more than 20 percent, producing quarterly revenue of $11.2 billion, up about 17 percent from the prior year.

While Rollins emphasized Dell's enterprise growth, and downplayed desktops and notebooks recent figures from research firm Gartner point to an upswell in demand for PCs by companies looking to refresh four-year-old computers.

Gartner said PC sales are expected to jump nearly 14 percent this year as U.S. businesses upgrade old machines and consumers snap up PCs that support wireless and digital media.

The research group expects PC shipments to top 187 million units in 2004, a 13.9 percent increase over 2003.