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As Consumer Sales Decline, Dell Sees Silver in the Cloud

Dell is reporting some success in its struggle to retool itself as a cloud and enterprise services provider, even as the company's consumer business continues to decline.

The company reported modest 5 percent revenue growth in its Dell Services and Enterprise solutions and services businesses Tuesday, but said that consumer sales, which include laptops and PCs, were down 7 percent for its first quarter, ended April 29. Overall revenue wasn't much improved, however: US$15 billion for the quarter, up 1 percent year-over-year.

Thanks in part to a simplified product line and lower component costs for its consumer group, the company was much more profitable than expected, posting earnings of $0.55 per share, when excluding charges such as acquisition costs. Analysts had been expecting earnings of $0.44 per share on revenue of $15.4 billion, according to a survey by Reuters Thompson.

With the global PC market shrinking, Dell has been betting its future on new services and data-center technologies.

That strategy is now starting to pay off, company executives said in a press release. Dell's server and networking products revenue was up 11 percent for the quarter, as were sales in its storage division.

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