Cutting Costs Sees an Increase in Profits for Dell

Good news recently came out of Dell as the computer company reported that its net income for the last quarter nearly tripled as Dell benefited from lower computer component costs and growth in certain areas of its more profitable product lines.

Dell's shares rose 5% in extended trading, beating analysts' adjusted net income estimates but coming a bit short of revenue estimates. For Dell's first three months, which ended on April 29th, Dell earned $945 million, which equals about $0.49 per share, which was higher than the $341 million, $0.17 per share of last year.

If you exclude one-time items, Dell earned $0.55 per share which easily beat the numbers expected by Wall Street. Analysts polled by FactSet estimated adjusted earnings of $0.43 per share. Revenue rose only 1% to $15.02 billion from $14.9 billion last year, which was short of the predicted $15.4 billion. Product revenue remained the same at $12.1 billion with services revenue rising 6% to $3.0 billion.

Dell's consumer section, which accounts for nearly 20% of the company's revenue, dropped 7% to $3.0 billion as well. Consumer demand also fell more than anticipated and in an interview, CFO Brian Gladden attributed some of the cause to "the market for consumer PCs being saturated in developed countries." He also added that "while tablet computers are still a small portion of the PC market, there's clearly an impact for them on consumer demand for traditional PCs."

Revenue from large enterprises increased by 5% to $4.5 billion with revenue from small and medium-sized businesses increasing 7% to $3.8 billion. Public sector revenue, on the other hand, saw a decline of 2% to $3.8 billion. Dell saw the biggest gain in servers and networking. In this category revenue rose 11% to $2.0 billion. Sales of desktop PCs fell 8% to $3.3 billion with mobile PCs rising 3% to $4.7 billion.

Dell has been working hard to increase their proportion of server computers, data storage devices and technology consulting services sold. According to Dell, these areas are more profitable than the company's base PC business. However, compared with one year ago, most of Dell's product categories accounted for nearly the same percentage of revenue and computers for consumers, and businesses continued to make up over half of Dell's revenue.

However, Dell's gross margin, which is still an indicator of the efficiency of Dell's business, came in at 22.9% which was higher than the 20.4% expected by analysts from Reuters. Dell's strategy of focusing on more profitable areas of business and cutting back on lower-margin offerings is working extremely well according to Gladden.

Andy Hargreaves, an analyst for Pacific Crest, thinks that Dell's gross margin is "impressive" and stated that "Dell should be able to keep it up for now." Hargreaves also stated, "They do have the potential to sustain margins long-term, but in order to do so they have to drive toward more services-oriented businesses."

Taking a look at this current quarter, Dell is predicting that revenue will rise by a percentage in the mid-single digits over the first quarter, slightly faster than its seasonal 2% to 3% growth. Analysts are expecting somewhere around $16 billion. Dell continues to expect revenue to grow 5% to 9% for the full fiscal year which implies a total of $64.6 billion to $67 billion with analysts expecting around $64.4 billion.

Dell saw shares rise $0.86, or roughly 5.4%, to a total of $16.76 in extended trading. The stock finished regular trading down $0.10 to $15.90.

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Source: The Associated Press - Dell profit jumps as computer maker cuts costs

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Wozjob Apple 1 sells for Nearly a Quarter of a Million USD

The Apple-1 computer was hand build in Steve Wozniak's parents garage. Steve Job's came up with the idea of selling it. The Apple-1 was first demonstrated in April 1976 at the HomeBrew Computer Club in Palo Alto.

Originally, the Apple 1 sold for $500 when it was sold to a reseller 1976. It was made out of wood and was billed as the first "personal computer." The retailer marked up the Apple-1 by 33% giving it a price of $666.66.

An Apple I reportedly sold for $50,000 USD at auction in 1999, with another apparently selling in 2009 for $17,500.

Fast forward to November 2010. This same Apple I (with serial number 82) sold for $178,000 ($213,600 including the 'buyer's premium') at Christie's auction house in London , making it by far the highest price paid for this model to date, at £133,250 ($210,000).

The high value of this particular example is likely due to the rare documents and packaging offered in the sale rather than the computer itself; namely (and amongst others) the original packaging (with the return label showing Steve Jobs' parents address, the original Apple Computer Inc 'headquarters' being their garage), a personally typed and signed letter from Jobs (answering technical questions about the computer) and the original invoice showing 'Steven' as the salesman.

Story Sources: EpochTimes, Wiki, Gather

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Record Profits For Dell Due to Increase in Demands

On 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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7:36 AM | 0 komentar