Dell continues to take market share away from its
rivals and is showing no sign of slowing down, the company said Thursday
during its second-quarter earnings report.
The Round Rock, Texas-based computer maker said its revenue was a record
$11.7 billion for the quarter ending in July. Net income was $799 million, with earnings per share at 31 cents — also a Dell record.
“The pricing environment has been the same. The key to our success was
execution,” CEO Kevin Rollins said during a conference call to analysts and
press. “Our teams were keeping an eye on what was selling, and we went after
the appropriate businesses. We have a good insight into the corporate
business market and the purchase cycle.”
Rollins said he did not see a sales slowdown in June or at the end of
July in the same way that HP warned
investors of today. Much of Dell’s sales came from its enterprise and
small-to-medium business customers, although the company said its
back-to-school sales should be good, as well.
“Inventories went down in the past month or so. We told the Street about
that,” Rollins said. “My guess is that they can come down further. That is
not to say that there is a problem. This just brings us more in line with
seasonal cycles. We are profoundly different from other companies. We have a
different business model, and we participate in different segments. To paint
the entire industry with one brush would be dangerous. The market should not
value every company the same.”
Dell said demand for its servers and printers were especially high during
the quarter. The company saw a 31 percent increase in server shipments in
Q2. The company said it is on tap to introduce a new, eighth generation of
PowerEdge servers, which feature more powerful processors and enhanced
systems-management software.
Likewise, revenue from software and peripheral products increased 31
percent, due to a strong demand for Dell printers. Those products are being
introduced in more countries, including Japan during the second quarter and
China in Q3. The company said it expects to sell five million printers
during fiscal 2005, up from an original target of four million. Dell’s
overall printing and imaging business is now at a $1 billion annual run
rate.
Dell’s success also included a lot of overseas sales. The company said
its Q2 shipment growth in Europe, the Middle East and Africa was 30 percent.
Research firm IDC’s numbers support Dell’s claims that
it shipped product 12 points higher than the average of rivals like IBM
and HP
in the region. Among its
highlights, Dell saw a 44 percent rise in server shipments, and a 60 percent
increase in total storage revenue.
The Asia-Pacific markets, including Japan, showed a similar trend, with shipment growth of 28 percent and server volumes in the region up 33 percent.
The company has had a tougher time in the over-saturated American market,
adding nearly two points to its U.S. market share. Dell said total demand by
large corporate and small and medium business customers increased 21
percent. Volume outside the U.S. rose 25 percent, led by strong growth in
Canada.
