Computer-maker Dell on Wednesday posted a 12 per cent increase in net income to USD 983 million for the third quarter, but has warned that its full-year revenue could be impacted by the uncertain macroeconomic environment and an industry-wide shortage of hard drives.
Net income stood at USD 875 million in the third quarter of 2010. Revenues of the company, however, remained flat at USD 15.36 billion in Q3, 2011, compared to USD 15.39 billion in the same period a year ago.
"Given the uncertain macroeconomic environment and complexity in working through the industry-wide hard drive issue, the company is trending to the lower end of the range of its revenue outlook of 1 to 5 per cent full fiscal-year growth," Dell said in a statement.
There may be a slowdown in PC manufacturing through 2012 after flooding in Thailand severely disrupted production of hard drives, which is a key component in computers.
Dell also lost market share during the third quarter to Asian rival Lenovo Group, which claimed the No 2 ranking in PCs behind market leader HP, according to research firm Gartner.
Hewlett-Packard was the largest vendor with a 17.7 per cent market share in Q3, while Lenovo moved into the second spot with a 13.5 per cent market share. Dell had an 11.6 per cent share of global PC shipments in Q3.
Internationally, revenue in growth countries - defined as those outside the US, Canada, Western Europe and Japan - grew by 11 per cent in the reporting quarter and accounted for 29 per cent of Dell's revenue.
The Asia-Pacific and Japan saw revenue growth at 10 per cent, led by 23 per cent growth in China and a 13 per cent increase in Australia/New Zealand. Revenue in BRIC countries increased by 14 per cent.
Furthermore, EMEA revenue increased by 4 per cent. Revenue in European growth countries increased by 12 per cent, led by the Czech Republic, Poland and Russia.
Cash flow from operations amounted to USD 851 million during the quarter and USD 5.2 billion over the last four quarters.
Dell ended the quarter with USD 16 billion in cash and investments and repurchased USD 600 million in stock in the quarter.
During the year, Dell has spent USD 2.18 billion to purchase 142 million shares of Dell stock.
"Our results this quarter and over the past year reflect a new Dell, one focused on providing our customers productivity-enhancing solutions either developed organically or acquired," Dell chairman and CEO Michael Dell said.
Revenue from Dell's enterprise solutions and services business -- including sales of servers, storage, networking, and services -- increased by 8 per cent over the same quarter last year to USD 4.7 billion, an all-time high. It represented 31 per cent of Dell's revenue.
Server and networking revenue increased 13 per cent year-on-year, driven by continued momentum in server virtualisation.
Dell-branded storage revenue grew 23 per cent y-o-y, driven by demand for EqualLogic and Compellent technology. Dell Services revenue, on the other hand, grew 10 per cent to USD 2.1 billion and now represents 14 per cent of Dell's business.
The total value of new service contracts signed by Dell over the past 12 months is USD 1.9 billion. The services backlog is now USD 15.5 billion, up 11 per cent from a year ago.
"Consistent with our strategy and the investments we have made, we continued to see excellent momentum in our enterprise business, with double-digit revenue growth in services, servers and networking, and in key growth countries, despite some macroeconomic uncertainty," Dell chief financial officer Brian Gladden said.
Segment-wise, large enterprise accounted for USD 4.5 billion of revenue, up 4 per cent from a year ago, while the public segment raked in USD 4.4 billion of revenue, down 2 per cent from a year ago.
"Spending was slow in US federal and Western Europe," the company said.
Enterprise solutions and services revenue was USD 1.6 billion, while small and medium business amounted to USD 3.7 billion, up 1 per cent, and Consumer revenue stood at USD 2.8 billion, a 6 per cent decline y-o-y.