Dell Desktop, Storage Revenue Drops in Q2

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, Dell said on Tuesday.

On a GAAP (generally accepted accounting principles) basis, Dell recorded a net profit of US$890 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 $0.48. Net income on a non-GAAP basis was $1 billion, an increase of 60 percent, and 0.54 per share, 5 cents above the consensus estimate from analysts polled by Thomson Reuters for earnings per share.

Dell's overall revenue grew by just 1 percent to $15.7 billion, and the company's product revenue, minus software, was flat compared to the previous year. However, Dell's services revenue grew by 6 percent year over year.

The company's revenue results were mixed across its enterprise and consumer product lines. Dell's desktop revenue was $3.7 billion, dropping by 3 percent compared to a year ago. Storage revenue was $502 million, dropping by 20 percent. The company's laptop revenue grew by just 1 percent year over year to $4.7 billion.

However, the company's server and networking revenue grew by 9 percent to $2.05 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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