We’re well aware that we’re in a recession and that the tech sector is going through hard times. Dell announced to investors yesterday that its quarterly earnings are down 63 percent as compared to last year. Ouch.
Much of the decline isn’t due to consumers hanging onto their wallets, however, as it’s businesses that are deferring spending. Large Enterprise revenue decreased 31 percent from a year ago, as many large IT departments have shrunken budgets. Revenue from small and medium businesses saw nearly the same decline at 30 percent decrease from a year ago. Revenue from the public sector decreased by 11 percent decrease, thanks to a growth in larger government accounts.
Consumer revenue was down 16 percent, but interestingly, shipments increased 12 percent over last year. It seems that even in times of a cash crunch, consumers still want their computers, albeit cheaper ones.
“We’re continuing to transform the company on the cost side and delivering strong cash flow,” said Michael Dell, chairman and chief executive officer. “Re-establishing cost leadership and having flexibility to invest in our business will position us well as IT spending improves.
“Signals about the demand environment are mixed, but we’re preparing for what we believe will be a powerful replacement cycle, with virtualization and managed services playing larger roles in what customers want and Dell provides,” Dell added.
The replacement cycle that Dell is referring to is likely the release of Windows 7 and a new generation of chips from Intel based off of the Nehalem architecture. Are you holding off any upgrades in anticipation of what’s just around the corner?