Dell’s Q4 Consumer Business Up 11 Percent from Q3, But Down From Year Earlier
Dell’s consumer business operating profit improved 2.1 percent in fiscal Q4, the company said late Tuesday in its quarterly earnings webcast. Overall, the company reported profit of $927 million, more than double the year-ago quarter, with growth driven by the enterprise side. The stock rose 12 percent to $15.56 Wednesday.
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Chief Financial Officer Brian Gladden credits the boost in consumer business operating profit to product and marketing initiatives, “matching the supply chain with retail buying seasons,” a “favorable component environment” and a streamlined product portfolio, he said. The company made a conscious decision to “prune some growth” in the business during the quarter, he said, especially during the holiday season. Dell will continue to “make those trade-offs in a smart way,” but expects to grow faster in consumer business this year, he said. Overall consumer business revenue was $3.3 billion for the quarter, down 8 percent year-over-year after last year’s quarter that benefitted from the launch of Windows 7, and up 11 percent from fiscal Q3, Gladden said. He said the company is counting on the consumer business to deliver improved margins in fiscal 2012 from the fourth quarter. Retail accounts for about 20 percent of Dell’s revenue, he said.
CEO Michael Dell told analysts the company will enter the 10-inch tablet market later this year with Android Honeycomb and Windows-based products to supplement the Android and Windows Mobile 4.1-inch products it now offers. Regarding platform overlap between Android and Windows, Dell said the company is meeting customers’ preference for either operating system. “It’s very easy for us to create platforms that share a great deal of hardware commonality that can run either operating system,” Dell said. The company is not currently considering other options, he said, and doesn’t see “any other viable options worthy of consideration.”