Dell reports higher profit despite lack of revenue growth

TIN BOX FLOGGER Dell has somehow managed to conjure up nine per cent higher profit despite posting a small decrease in revenue.

Dell's third quarter fiscal year 2012 results showed the firm had raked in $15.37bn, pretty much the same as 12 months previously. Despite the non-existent growth in sales, Dell managed to increase year-on-year net income by nine per cent to $893m.

Dell has been trying to move away from selling tin boxes and move into the higher margin server market. In particular the firm focused on the fact that 'enterprise solutions' made up 31 per cent of its total revenue with revenue from servers and networking equipment growing by 13 per cent.

Brian Gladden, Dell's CFO said, "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."

Gladden's macroeconomic uncertainty is most likely referring to the stuttering growth seen by its corporate customers and felt by consumers in their wallets. It would certainly go some way to explaining why Dell hasn't managed to increase its revenue over not just the last quarter but the fiscal year to date.

Yet when Dell's 2012 fiscal year to date is compared against the same period in its 2011 fiscal year, it shows the company has been doing astoundingly well. While revenue growth has grown a mere single per cent, astonishingly profit has grown 60 per cent.

The firm cited hard drive supply problems as a reason why it might end up reporting revenue growth nearer one per cent rather than its five per cent forecast.

While Dell's profits have risen, the fact that it hasn't been able to increase revenue will be cause for concern. After all, there's only so much a firm can do to cut costs before staff morale and product quality start to suffer. µ