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Technology / AI and automation

DELL: NO “ME TOO” SERVICES, PRODUCTS SUFFICE FOR NOW

Intense competition from other PC makers imitating its successful build-to-order sales model and pricing pressure only flatters Dell Computer Corp’s storming fourth-quarter numbers. But how is Dell going to make the next quantum leap in revenue to keep up with its nemesis Compaq Computer Corp – or indeed does it even want to be a full service provider? Storage and no, according to CEO Michael Dell. Dell said it had no desire to be the next EDS or Andersen Consulting and unlike Compaq is not stuck between product and solutions business models, the reason it says Compaq bought DEC. Dell said it does not want to compete with its solutions services partners and believes the increased use of Windows NT at the enterprise level will make systems integration easier and erode both proprietary integration models and margins across that industry. It’s sticking with the product model for now. Its big play for additional revenue around spring or summer will be a new storage strategy and products. It sounds as if four-way Deschutes boards in eight-way servers and clustering will provide all the juice Dell needs at the high-end. It highlights the fact that revenue from sales of enterprise systems topped $1bn in the year – 250% up on its fiscal 1997 – and notebooks were worth $2.2bn. And bucking the trend, Dell’s fastest growing geography was Asia/Pacific where revenue was up 79%. It’s generating $4m a day from web site sales and says unit growth year-on-year was 60%. Inventory is down to seven days – it sells the equivalent of its entire each week – and it has $1.8bn cash. Dell reported fourth quarter earnings up 51% at $285m over $188m last time on revenue which rose 55% to $3.73bn over $2.41bn. Earnings per share were $0.81, five cents ahead of the consensus. For the year earnings were up 82% at $944m compared with $518m last time on revenue up 58% at $12.32bn compared with $7.75bn. Dell is splitting its stock two-for-one on February 27th. Its share price closed up $1.87 on the day to reach $113.18.

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CBR Staff Writer

CBR Online legacy content.