Dell Reports Consumer Weakness

Dell (NASDAQ: DELL) reported its first quarter fiscal 201 earnings on Tuesday afternoon, showing strength in its enterprise business units.

For the quarter, Dell reported revenue of $15 billion, which is a 1 percent year-over-year increase. GAAP Net Income was reported at $945 million which is a 177 percent increase over the first quarter of fiscal 2011. Earnings Per Share (EPS) were reported at $0.49, which is a 188 percent year-over-year increase.

Growth for Dell came from a number of key areas. Dell’s Server and networking revenues increased by 11 percent during the quarter. Dell has been actively growing its networking business, with new products and partnership including ones with Juniper and Aruba Networks.

Dell’s overall enterprise solutions and services business reported $4.4 billion in revenue for the quarter, representing 5 percent year-over-year growth. The enterprise solutions business revenue now makes up 30 percent of Dell’s total consolidated revenues.

“We built a significant leadership position in Servers, having sold around 15 million of them during the past decade,” Michael Dell, CEO of Dell said on the company’s earnings call. “Now, we’re extending that strength further into Storage and Networking.

Not all elements of Dell’s enterprise focused business units were on the upswing during the quarter. Dell’s storage business reported a 13 percent revenue decline for the quarter.

Also on the decline was Dell’s consumer business. Dell reported a 7 percent decline in consumer revenues to $3 billion for the quarter.

One of the hottest areas of consumer technology in recent months has been the tablet space. Michael Dell doesn’t however necessarily see tablets as a large growth opportunity for his company. Dell noted that his view he doesn’t expect that a lot of companies will provide three devices for all of their users.

“The tablet, in almost all the instances we found, is a third device,” Dell said. “So it’s not exactly clear how many units are going to be sold. I think it’ll be a lot of units. But I’m not seeing this replacing either the smartphone or the PC in large numbers of organizations.”

Sean Michael Kerner is a senior editor at, the news service of, the network for technology professionals.

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