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Record Profits For Dell Due to Increase in Demands

Written By Shelly Alicia on Wednesday, November 24, 2010 | 7:36 AM

dell record salesOn Thursday, November 18th, Dell reported their third quarter earnings to be record breaking due to the increased demand for PCs and computer services. Despite this report from Dell, consumer revenue for the company only showed a 4 percent increase for the third quarter and is predicted to have little to no increase for the fourth quarter and holiday season.

Dell’s reports were pretty incredible, despite what consumer revenue says. They reported a net income of $822 million, which is a 144 percent increase from the same period a year ago, and $15.39 billion in revenues, which is up 19 percent from the same period a year ago.

“Our strong results demonstrate that we are listening to customers and delivering what they want,” stated Michael Dell, chief executive of Dell. “It validates that our strategy to offer choice and efficiency at every level of the IT enterprise computing stack is taking hold, and we are more focused than ever to being a true partner – not merely a provider – to our customers. Dell is growing in the right areas, and I'm very excited about our momentum."

Dell executives have said that the company has been focusing on “profit share” instead of market share when it comes to units sold. Chief financial officer Brian Gladden said, “I believe that the third quarter results demonstrate the strategy we have described to you over the past year is the correct one,” in a conference call with analysts on Thursday.

Dell’s Large Enterprise revenue came in at $4.3 billion, which is a 27 percent increase from last year, with an operating income of about $400 million (or 9.2 percent of revenue). Their Small and Medium Business revenue came in at $3.7 billion, which is a 24 percent increase, with an operating income of $391 million. Their consumer revenue came in at $3 billion, which was only a 4 percent increase, as was mentioned above. Dell said that for operating income the consumer segment improved to breaking even for the quarter, despite the “muted” consumer demand.

On Thursday Dell also announced that its new Inspiron Duo laptop was just made available for pre-order. All of these announcements come a day after the announcement that Dell communication chief Ron Garriques was leaving the company. This has caused some speculations about what will happen to Dell’s plan of creating a line of cell phones.

In the conference call though, Garriques resignation from the company was barely even addressed. The questions were focused more towards the “management changes” at Dell and the impact that the tablet industry will have on the company. Executives responded by saying that Dell’s 2011 tablet release will address “all the opportunities we see for tablets.”

Michael Dell went on to say, “We are very much in the mobile space, working very much with both Android and Windows Mobile 7 and encouraged with the development of both of those and see them as a great opportunity for us.”

Steve Felice, the president of consumer small and medium business for Dell, made an apparent reference to tablets and the general mobile space by saying, “We want to mainstream the supply chain, the sales capability, and the marketing capability. All of this is aimed to bring this more to scale in faster fashion than we normally envisioned.”

In the conference call Dell did not present any target revenues for the fourth quarter. Instead the company said, “Fourth quarter revenue is expected to track in-line to slightly up from the third quarter as commercial demand remains stable while consumer demand remains more muted.”

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