Dell reports double digit revenue decline

Dell announced its third quarter revenues had fallen 11 percent from the previous year to $13.7 billion. Revenues from consumer sales fared poorly, dropping 23 percent to $2.5 billion, with operating profits making up 2.7 percent of total revenue.   Enterprise revenues dropped eight percent to $4.2 billion, while SMB sales saw a one percent decrease to $349 million.

Regionally, Dell saw revenue in the Americas fall nine percent, while sales in Asia-Pacific and Japan dropped by 11 percent. EMEA continued to pose a challenge to Dell with a 15 percent decrease for the quarter.

Despite the gloom, there were some areas of optimism for the company as Dell attempted to shift its business away from low margin PC sales to offering software and services.  Dell saw its Enterprise Solutions division grow three percent to $4.8 billion, while server and networking sales also saw a solid increase of 11 percent.

CEO Michael Dell also pointed towards the services provided by acquisitions such as Wyse, which have helped round out the company’s offerings.

“We are consistently executing our end-to-end solutions strategy for the benefit of our customers,” Dell said. “In the quarter, we completed the acquisition of Quest Software which – along with other recent acquisitions like SonicWALL and Wyse – adds leading management, security, virtualisation and cloud capabilities to our expanding portfolio of powerful solutions”.

However, Chief Financial Officer Brian Gladden acknowledged Dell is operating in a difficult environment.

“In a difficult global IT spending environment we saw solid proof points that demonstrate progress in our strategy,” Gladden said. “A highlight has been the strong progress of our newly introduced servers, with our server and networking business up 11 percent”.

He added that there is optimism around consumer PC sales with the release of Windows 8: “We’re also encouraged by early interest in our new Windows 8 touch portfolio and the opportunities it creates for our commercial and consumer businesses.”.

Third quarter PC shipments were down eight percent according to a recent report from Gartner, with Dell’s portion falling 13.7 percent year on year to  9.2 million units.  Declines were harshest in EMEA, Gartner said.  Analysts believe that as Dell moves towards ‘solution provider’ status, the company still needs to retain a strong footing in the PC market.

This week Dell announced that it would be offering discounts to storage resellers to celebrate the fifth year of its PartnerDirect programme in EMEA.