Profit rises to $733m for Dell in Q2

PC maker making steady progress in its transformation strategy, says analyst.

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By  Administrator Published  September 2, 2007

PC maker Dell has reported profit of $733 million on sales of $14.8 billion for its second quarter of fiscal 2008 in its preliminary financial results.

The company did not provide figures for the comparative period a year earlier.

Analysts said that Dell, which recently announced it was restating its financial results for 2003 through to 2006, said the results were a positive sign in the firm's efforts to transform its costs and operations.

"It seems that Dell is making steady progress in its attempt to get back to its winning ways of the first half of the decade, when it was taking market share from HP and IBM left, right and centre," commented Ian Brown, a senior analyst at Ovum.

The firm's overall revenue was driven by sales of servers, which accounted for 11% of total net revenue in the quarter, in comparison to 9% of total revenue in the second quarter of 2007.

Brown added, however, that Dell's transformation from box shifter to solutions supplier would not happen overnight.

"Dell is still in the early stages of implementing a transformation programme designed ultimately to reduce its operating expenses," he said. "And as it implements that programme, its operating profit has been impacted by higher expenses in the second quarter, including higher headcount and associated costs related to investments in sales and customer support."

"Customers increasingly want to buy solutions rather than boxes and to boost its ability to provide solutions, Dell is having to invest in software, services, and partnerships with indirect distribution channels," he added.

Dell's agreed during the quarter to buy software solutions provider ASAP Software for approximately $340 million.

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