News

posted on 30 May 2008 14:40

Dell has reported good progress with its Q1 fy09 results showing 21.7 percent increase in unit shipments year-on-year and a 19.2 percent rise in revenues.

The Q1fy09 net revenue number was $16.077 billion compared to $14.722 billion in Q1fy08. Net income was $784 million ($0.38/share) compared to $756 million ($0.34/share) in the year-ago quarter. The gross margin percentage was 18.4% compared to 19.3%, down 83 basis points. Unit shipments rose 21.7% year-on-year.

Generally Dell has cut costs; both headcount and OPEX went down, and increased its productivity. It says it has grown faster than the market in all main geographies and all main product sectors: notebook; desktop; and servers. CEO Michael Dell said there is scope for more progress in both cost reductions and productivity.

Turning to storage Dell reported a 15% rise in year-on-year revenues, with $631 million storage revenues in Q1fy09 compared to $549 million in Q1fy08.

Don Carty, vice chairman and CFO, said: "In storage we grew revenues by 15 percent and, bsed on our own estimates, again took share world-wide in Q1." It was the first full quarter with the Dell EqualLogic PS5000 IP SAN arrays. DEll claims it is the firm number 1 world-wide provider of iSCSI SAN products with the EqualLogic boxes plus the Dell/EMC AX4 and 5i products.

A person close to the situation suggested that Dell had a $50 - 60 million contribution from the EqualLogic products. Without these products a proportion of the sales could have been expected to have gone to the Dell/EMC products, making this potentially negative for EMC. Some 12.5% of EMC's calendar Q1 08 revenue came from Dell, with 33% of CLARiiON revenue coming from Dell.

It appears possible that Dell is preferring the EqualLogic products in the SMB area over the Dell/EMC products.

The Dell/EqualLogic sales rise this quarter has meant revenue for Xyratex which supplies the drive enclosures.

Dell is growing strongly, making particularly good progress in China, in cloud computing and in the virtualised servers area. It is doing a very good job of keeping the Dell EqualLogic and Dell/EMC storage products differentiated. If the EqualLogic range scales up then there may be some cannibalisation of Dell/EMC sales but there is no evidence of that yet.

Dell sees a conservative outlook in the USA offset by improving business countries. It aims to grow faster than the industry.

^{[Paul Roberts, news editor.]}