In Q3 results released last night, Dell posted another quarter of flat revenues amid tough market conditions for many of its offerings. The company says it reckons full-year growth will be at the “lower end” of its 1-5% guidance. That means very little or no growth, once acquisitions and currency are factored in. But at least margins continue to perk up.
Total revenues in the quarter to October were $15.4bn, flat year-on-year and down 2% sequentially. Gross margin was 23.1%, up 310 basis points y-on-y. Operating margin was 8.4%, up 80 basis points.
The better news on growth for Dell is to be found in its enterprise and services business. Large enterprise revenue was up 4% year-on-year to $4.49bn, with the Perot-fuelled services chunk of that showing 14% growth. But SMB was tougher, with just 1% growth, and public sector revenue fell by 2%. Consumer was toughest of all, however, with a 6% fall in the quarter, although here Dell is naturally pointing to its exit from “low value segments”.
These overall trends were reflected in the segment performance too. Overall services were 4% up and new contract signings on a trailing 12 month basis edged up by $200m to $1.9bn. But desktops were down 6% and notebooks down 2%. Clearly in these latter areas Dell hasn’t benefitted, unlike some other suppliers, from HP’s flip-flopping over its personal devices business (see HP: the lady is for turning).
Much interest for us lies in Dell’s ambitions in infrastructure services, where its building of data centre capability (including right now in DC hotspot Slough) and willingness to acquire make it potentially a significant disruptive influence in an increasingly crowded market. We plan to catch up with the company in the UK on that topic in the coming weeks and to bring TMV subscribers more detail on its plans and prospects.