Dell's preliminary Q2 results toast good health

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Dell has published the preliminary financial results for its 2008 second quarter, reporting revenue of $14.8 billion and operating income of $896 million during the period ending 3 August.

While these results also showed a profit surge of 46 per cent to $733 million from 2007 Q2's $502 million, the figures are still subject to change and Dell is also in the process of restating previous financial earnings statements for 2003, 2004, 2005 and 2006 and the first quarter of 2007.

Individual business units also performed well during the quarter, with the server, storage, mobility and desktop divisions reporting revenue of $1.6 billion, $0.6 billion, $3.9 billion and $5.0 billion respectively.

The company's enhanced services arm generated revenue of $1.3 billion and a further $2.4 billion was brought in by the software and peripherals unit.

"We continue to invest in company initiatives that align our products and services around customers' needs in order to drive long-term, sustainable performance and extend our position as a trusted technology partner," said the company's chairman and chief executive Michael Dell.

"While our results demonstrate we've made progress against our goals, we are still in the early stages of transforming our company's structure, costs and operations," he said.

Dell's transformation strategy will see it on a mission to increase profits further, while reducing operating expenses and streamlining resources, including shedding jobs.

The results need to be viewed with caution given Dell's current restatement situation, according to Ian Brown, a senior analyst at Ovum.

"We think Dell still has more investments to make on the services side. It has introduced consultation and deployment services around Microsoft servers and messaging, server consolidation and virtualisation, and storage, including a number of new consulting services in EMEA in the first half of 2007. But services are people-intensive and the people Dell needs - solutions architects, technical consultants, project managers, etc. - don't come cheap. To get some of these people and skills it will need to hire and acquire. This is likely to mean there will be a further impact on Dell's operating profit in the remaining quarters of FY 2008," he said.

"Dell's transformation from box shifter to solutions supplier is not only going to take time and money, but also trust on the part of its enterprise customers that it has the skills and expertise to be their solutions supplier of choice," he said.

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