Dell desktop, storage revenue drops in Q2

However, Dell reports strong profit growth in the second quarter

Dell had strong profit growth in the second fiscal quarter of 2012, although the company's revenue was hurt by a drop in sales of storage and desktop products, the company said.

On a GAAP (generally accepted accounting principles) basis, Dell recorded a net profit of $US890 million for the quarter ending on July 29, up 63 percent compared to the same quarter a year ago. The company recorded earnings per share of $US0.48. Net income on a non-GAAP basis was $US1 billion, an increase of 60 per cent, and 0.54 per share, $US0.05 above the consensus estimate from analysts polled by Thomson Reuters for earnings per share.

Dell's overall revenue grew by just 1 percent to $US15.7 billion, and the company's product revenue, minus software, was flat compared to the previous year. However, Dell's services revenue grew by 6 per cent year over year.

The company's revenue results were mixed across its enterprise and consumer product lines. Dell's desktop revenue was $US3.7 billion, dropping by 3 per cent compared to a year ago. Storage revenue was $US502 million, dropping by 20 per cent. The company's laptop revenue grew by just 1 per cent year over year to $US4.7 billion.

However, the company's server and networking revenue grew by 9 per cent to $US2.05 billion.

The company is trying to move to higher-margin areas to deliver better results, the company said in a statement. Dell said the demand for servers and services was solid during the second quarter.

"We continue to see great momentum in the high-growth areas of our business," said CEO Michael Dell in a statement.

To build its data-center technology stack, Dell last month acquired Force10 Networks, which the company hopes to close during the third quarter. Dell projects its third-quarter revenue to be flat relative to the second quarter, the company said.

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Agam Shah

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