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Dell gets record profit but sees home PC sales drop

updated 05:55 pm EDT, Tue May 17, 2011

Dell Q1 2011 buoyed by enterprise, hurt by home PC

Dell on Tuesday posted results for the winter that at once set a record but also cast doubt on its home PC business. Its net profit nearly tripled year-over-year to $945 million leaning mostly on its enterprise and small business sales, whose operating profits were up 11.3 percent and seven percent each. Revenue in its consumer business, however, was down by seven percent as interest was "softer than expected," the Texas system builder said.

The group turned a profit of $136 million based mostly on cutbacks, including its decisions to kill off the Adamo and Studio XPS in favor of a simpler line. A focus on more premium computers and a more efficient approach to Dell's established but at times delay-prone supply chain also helped play a part.

Dell also acknowledged that its revenue of $15.02 billion was just a one point gain over the same quarter a year ago. Its growth outlook for the summer was optimistic and significantly above its usual prediction at the middle single digits based on government deals, more systems using 2011 Intel chips, and back-to-school buying.

The results drew close parallels with HP's performance. Although Dell was much more profitable, it like HP was counting on corporate sales to make up for a deficit in the home business. Competitors like Apple and Toshiba have had a weak position in the corporate world but have been the only two of the top five PC vendors to be growing their computer sales based on their successes in home PCs, often at the expenses of Dell and HP.

Dell has been relatively resistant to the effect of the iPad and other tablets due to its smaller share of netbooks, although its emphasis on cheap Inspiron notebooks may have posed a risk. Companies like Acer and HP have depended much more on netbooks and slumped as a result.

by MacNN Staff



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