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By Mel Duvall
Dell rode a surging market in corporate sales to a 52 percent increase in profits in its first quarter.
The company reported Thursday that net income for the three months ended April 30 was $441 million, up 52 percent from the same period a year ago. Excluding one-time charges, the company earned 30 cents a share, beating analysts forecast by three cents.
“We had a solid first quarter in an improving global environment,” chief financial officer Brian Gladden said. “We feel good about the growth across our commercial business as it approaches nearly $50 billion in revenues. We will continue to make investments in our enterprise solutions throughout the year.”
Despite recent market uncertainty and fears over the European debt crisis, Dell was the latest in a series of big technology players to point to a global upturn in enterprise spending. Earlier this week HP reported a 27 percent increase in profits on a 13 percent gain in revenues.
Dell said revenue in its large enterprise unit was up 25 percent, to $4.2 billion, led by a 61 percent increase in server revenues, and a 44 percent gain in services revenue.
The company’s public sector unit also had a strong quarter, with revenue increasing 22 percent to $3.9 billion. Revenue from services, which includes the company’s Perot Systems consulting business, more than doubled from a year ago. According to research firm Gartner, Dell is now the largest healthcare IT services provider in the world.
Small and medium-sized business revenue saw a 19 percent increase to $3.5 billion and revenue from the company’s consumer business gained 16 percent to $3.2 billion. Unit shipments increased by 20 percent, reflecting a continued squeeze on margins.
Dell said it is optimistic that business will continue to grow through the year, despite the economic uncertainty. “The company believes it is seeing the early stages of a corporate IT refresh,” it said in a statement.
Dell said it expects seasonal improvements from its state and local government, consumer and education businesses in the second quarter, which will be tempered by a typically lower seasonal demand from corporate customers.
Other highlights from the quarter:
- Virtualization, cloud computing and data storage drove server sales in the quarter, resulting in a 39 percent increase in revenues. Revenue from the company’s EqualLogic storage product line grew 75 percent.
- Business in BRIC countries (Brazil, Russia, India and China) showed significant strength. Revenue increased 60 percent, led by India’s 90 percent growth and Brazil’s 81 percent. China revenues grew 44 percent.
- Mobility revenue was up 18 percent, following the release of the company’s Vostro 3000 series laptop lineup.
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