Dell profits crash as software arm makes a loss
Vendor's first-quarter sales slump by two per cent as it promises to improve long-term profitability
Dell says it will make important investments to drive long-term profitability following a 79 per cent annual drop in Q1 net profits.
For the three months to 3 May, Dell saw its GAAP net income plummet annually by 79 per cent to $130m (£85m) on sales which dropped two per cent over the same period to $14.1bn.
The firm's chief financial officer Brian Gladden said its profit knock was down to trying to improve its competitive position in key areas of the business, especially its end-user computing division. He added that the firm will "continue to make important investments to support our strategy and drive long-term profitability".
Dell's software arm posted a loss in Q1, but while it did not disclose how much the division lost, it claimed that the business "is on track to be accretive to earnings in the first quarter of fiscal year 2015".
The firm's Enterprise Solutions Group (ESG) was the best-performing segment, with operating profits up 71 per cent annually to $136m on sales which jumped 10 per cent to $3.1bn. Dell claims its networking sales within the division grew year on year by nearly a quarter in Q1, but its storage sales took a 10 per cent nosedive.
Its Services arm grew modestly by two per cent to $2.1bn year on year, driven by an 11 per cent sales hike across its infrastructure, cloud and security services.
As eponymous leader Michael Dell remains engaged in a mission to take the firm private, the vendor declined to offer an outlook for its coming year, but speaking on a conference call transcribed by Seeking Alpha, Gladden outlined the firm's strategy.
He said: "As we head into the new fiscal year, we continue to execute our strategy to be the leading provider of end-to-end scalable solutions. Our strategy is differentiated based on our focus on practical innovation, efficient and affordable solutions and our superior customer relationship model."