Dell Banking on Major Server Refresh

By Sean Michael Kerner (Send Email)
Posted February 22, 2012


Dell (NASDAQ: DELL) reported its fourth quarter and full year fiscal 2012 results late Tuesday, showing continued growth in the enterprise sector.

For the fourth quarter, Dell's Net Revenue came in at $16 billion which is a two percent year-over-year increase. Net Income during the quarter, fell by 18 percent on a year-over-year basis to $764 million. Revenue for the 2012 fiscal year was $62.1 billion, a 1 percent increase. Net Income for the full year was $3.5 billion up by 33 percent over 2011.

Brian T. Gladden, Chief Financial Officer and Senior Vice President of Dell, said during the company's earnings call that enterprise solutions and services revenue came in at $18.6 billion. Dell's enterprise business now accounts for 30 percent of all their revenues.

"While we're very pleased with our strategic progress and our total year financial results, we did expect to do a bit better," Gladden said. "We called out the global hard drive situation as a challenge for the quarter, and while we were effective in shaping demand and pricing for hard drive cost increases, we were impacted by the available mix of drives."

Gladden also noted that public sector growth was impacted by continued weakness in U.S. public spending.

Dell 12G Servers

Looking forward, Dell CEO and Founder Michael Dell, sees a bright future for servers in 2012.

"I think what we're seeing is the replacement cycle actually accelerating a bit on servers," Dell said during his company's earnings call.

Among the reasons why the replacement cycle is accelerating are the gains in processor power as well as what's going on with solid-state technology. Those gains will enable a new era of more intense virtualization loads. Dell plans to take full advantage of those gains in an upcoming server launch.

"So we're super excited about our 12G server launch, which is coming in the first quarter," Dell said. "Obviously, virtualization is a big deal and we're simplifying systems management, really going after the bigger workloads and accelerating the movement of work from minicomputer and mainframe environments onto our 12G platforms."

Dell is also expecting that Intel's next generation server chips, which will be part of Dell's 12g will help to drive a synergy with Dell's recent Force10 acquisition. Dell acquired networking vendor Force10 in July of 2011

"Stay tuned for the announcements but we're very excited and believe it's going to be another strong year for server, storage and networking," Dell said.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @TechJournalist.

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Tags: Dell

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