Hard drive supply issues weigh on Dell’s Q4 earnings

Dell’s fourth-quarter earnings were weighed down by weak client laptop sales and by pricing and provide problems caused by the floods in Thailand, Dell said on Tuesday.

For the quarter ended Feb. 3, Dell reported a web profit before one-time charges of US$913 million, down ten % from identical quarter last year. Earnings per share were $0.51, compared to the consensus estimate of $0.52, in step with analysts polled by Thomson Reuters.

Dell was challenged by pricing and provide problems associated with exhausting drives, particularly in its client laptop business, said Brian Gladden, chief monetary officer at Dell, on a decision to debate the earnings with media. Dell received the provides it required however costs went up considerably throughout the quarter.

The costs of alternative parts like memory and LCDs were favorable and helped offset a number of the impact, Gladden said. however the corporate had problem securing enough high-capacity drives for its additional profitable, higher-end merchandise.

“The disruption in provide can continue into the third quarter,” Gladden said.

Gladden provided the instance of the high-end XPS laptops, that are exhausting to sell with exhausting drives of solely 320GB. Overall, Dell absorbed roughly $150 million in prices associated with exhausting drive pricing problems, Gladden said.

“That played out across the portfolio,” he said.

Dell’s revenue for the quarter was $16 billion, growing by simply two % year over year. Analysts had expected revenue of $15.9 billion. together with one-time charges, web income was $764 million, an eighteen % drop compared to last year, and earnings per share were $0.43.

Revenue for the buyer section was $3.2 billion, down two %, Dell said. There was weak demand for client merchandise within the U.S., however revenue from alternative countries combined grew by ten %, Dell said.

Dell has been attempting to scale back its dependence on client PCs, where profit margins are lower, and expand in its higher-margin enterprise business.

Consumer merchandise accounted for concerning twenty % of Dell’s revenue within the fourth quarter, down from twenty one % a year earlier. Enterprise revenue was thirty %, identical compared to last year.

Dell can still focus heavily on its enterprise business within the year ahead, Gladden said. It poured billions into analysis and development for server and information center merchandise last year and can still do therefore in fiscal 2013, he said.

Dell invested $2.6 billion in enterprise-related acquisitions in fiscal 2012, the business year that simply ended for Dell. They included networking company Force ten Networks, storage company Compellent and security company SecureWorks.

The company’s enterprise business may receive a lift with the launch of the PowerEdge 12G line of servers within the current calendar quarter, said CEO Michael Dell. The servers can have Intel’s upcoming Xeon E5 processors, based mostly on the new Romley platform, a long-awaited update to Intel’s 5600 series processors announced in March 2010. Dell is hosting an incident in San Francisco Feb. twenty seven to announce new servers and alternative enterprise merchandise.

The servers can offer I/O enhancements through technologies like solid-state drives and 10-gigabit Ethernet, that may facilitate deploy virtualized machines faster. Dell is simplifying systems management within the servers and additionally integrating technologies from recent acquisitions like Force ten.

“We’re changing the complete sale from being a private product to effectively selling the complete information center,” Michael Dell said.

The company sees plenty of chance in software used to create cloud infrastructure and virtualize information centers, he said. the corporate earlier this month said it absolutely was forming a Software cluster, which is able to take charge of enterprise software offered in end-to-end merchandise. the corporate employed former CA CEO John Swainson to run the cluster.

For the primary fiscal quarter of 2013, Dell said it expects revenue to say no concerning seven % sequentially.

Customers to benefit from Cisco-HP divorce

The networking giant announced late last week, would be remembered as a channel and HP Services Global Alliance Partners.

In an initiative announced the report published Tuesday in Cisco, John Byrne, director of Network Business Quarterly, TBR, clients expressed more favorable terms, and better support to see, and greater reductions resulting from the additional competition.

The move is a clear marketing strategy pushing Cisco UCS (Unified Computing System) Data Center Strategy, which will be its blade servers marries network services. However, Mr. Byrne said, large organizations will likely choose from HP, Cisco, when pressed, to switch between the server and newcomers courageous decision UCS Cisco announced in March.

He noted that Cisco was the split with HP “inevitable”, since the move from Cisco in the market for servers.

Keith Goodwin, Senior Vice President of Cisco partners worldwide organization, said in an e-mail to ZDNet Asia: “In recent years, our relationship with HP by a partner for companies with different and conflicting visions of how d ‘ deliver value to develop the customer. ”

HP maintained as a network of certified partners, would give the company access to confidential information from Cisco, such as roadmaps, Goodwin noted. “Given the development of the supply of our relations is simply no meaning to these benefits for HP,” he said.

HP has also pushed his arm ProCurve Networking. The technology giant in the past year brought the ProCurve division in collaboration with its divisions of server and storage within its Technology Solutions Group.

Last September, HP has released a new range of ProCurve switches designed to integrate with its blade servers. An HP executive said at the time was in an interview with ZDNet Asia that the company would primarily compete with IBM and Dell Computer in the data center space and Cisco does not see as a threat.

In a reply by e-mail Tuesday a spokesman for HP told ZDNet Asia, the company would push the global reach and scale to use ProCurve portfolio to customers.

HP converged infrastructure architecture, announced in November last year on offers networking and HP’s target market segment identical to UCS is unfounded.

Following the announcement by Cisco to separate relationships, HP said: “We do not take it in the best interest of the client in a proprietary attitude.

“We will provide clients with consulting, integration, management and support services for their heterogeneous environments, and ensure that our hardware and software platforms for all major network platforms are optimized.

TBR Byrne said, Cisco and HP, however, continue to be committed today, with divergence time. “As both companies to take first place in their respective markets, they share many companies with which they are a very strategic relationship.

“Therefore it is up to each company to” play nice “for now, to avoid negative impact on the activity of their customers,” he said.

An opportunity for Cisco in emerging markets
In the view of analysts, the first opportunity for Cisco to lie with small businesses or new data centers.

Mike Allen, director of the chain in Asia for Cisco, said the company expects growth in emerging economies. “In our last earnings announcement, we saw two years of double digit growth over the year in the Asia-Pacific countries like China and India.”

Cisco plans to focus on his message of virtualization and collaboration with customers in the region, Allen.

In a previous interview with ZDNet Asia, Michael Warrilow, Hydra SightSpeed CEO, said Cisco needs to convince customers to its network and server teams work together to ensure the adoption of products of UCS.

The IDC said to offer a comment at the time also focused UCS ‘is for customers to build data centers from scratch to appeal.

Cisco announced earlier this month, has 400 people gathered at the NGC.

IDC for the third quarter 2009 figures showed that 50.7 percent of worldwide server blade market HP, IBM with 29.4 percent and Dell with 8.9 percent.

Cisco splits from HP

In a statement, Cisco said that it will not renew HP’s reseller contract when it ends in April, citing increased competition between the two in the data centre sector.

HP had been a strong partner for Cisco, but with the announcement of Cisco’s Unified Computing System (UCS) data centre offerings in November, and HP’s purchase of 3Com, Cisco decided that it wanted to terminate the relationship.

Keith Goodwin, senior vice president of Cisco’s worldwide partner organisation said in a statement: “Being a Cisco Certified Channel Partner has numerous benefits including access to proprietary information (such as product roadmaps) and partner profitability initiatives. Given the evolution of our relationship it simply no longer makes sense to provide these benefits to HP.”

The two companies have said they will continue to support existing customers.

Ovum analysts Adam Jura and Jens Butler said that the major winners will be Cisco’s other major partners.

“In the cold light of day, it appears that HP needs Cisco more than Cisco needs HP, with the 3Com acquisition expected to still take some time to be completely integrated. In addition, the QLogic partnership expansion will also demand substantial time and effort to fully cascade through and convert into real business opportunity,” said Ovum.

“Conversely, Cisco will need to be able to have better business value conversations with clients, as HP has been clearly superior in this area. With this change in direction, Cisco will still require someone to implement its products going forward. Hence, the major winners out of this will be the remaining partners, in particular Dimension Data (incorporating Datakraft), which is continuing to impress in its performance in the Cisco products and solutions implementation space. In light of Cisco’s strategy of enabling versus competing against partner services offerings, expect, in particular, DiData to be blessed with more attention from Cisco going forward,” the statement concluded.

Why used server – Black, White or Gray Market?

In the field, the word “gray market” is typically thrown around with disregard for it’s real meaning (product acquired from an overseas channel at lower prices than said product is provided in the local channel) in order to spread FUD. Some reps will even go as far as to refer to used IT hardware as “black market” or stolen/counterfeit equipment.

The truth is that if you’re dealing with a reputable dealer, the product is probably as “white market” as a bake sale. Of course, you have to protect yourself and make sure you’re working with a trusted vendor. Guidelines for feeling out a remarketed vendor are listed at the bottom of this article. First though, consider the following:

The manufacturers and distributors of the world (Sun, HP, IBM, etc…) would like you to believe any of the following scenarios regarding open market used versions of their products:

The system was stolen
The system is a counterfeit from overseas
The system was a reject

The truth is likely any of the following scenarios:

The equipment was traded-in from another user who gently used it and had it under maintenance with the manufacturer.
The equipment has come off of a lease and been redistributed out to the open market (any where from 3 months to 3 years).
The equipment was thoroughly tested and updated to the manufacturer’s specifications before shipment.

There certainly are some slim shady dealers out there (a tiny minority), so it makes sense that the manufacturer’s want to protect the users from them, although I suspect the manufacturers want to protect themselves from losing a deal for their brand new solution. So, how do you tell the wheat from the chaff?

Do your due diligence – Check references, check BBB listing, years in business, etc…
Ask if the reseller can put the following in writing on your quote and eventually on the signed purchase order:

– All hardware is (XYZ manufacturer) original equipment.
– All hardware is guaranteed eligible for the manufacturer’s maintenance.
Ask whether the licensing will be an issue.
– Some manufacturers require recertification or new licenses in order to acquire maintenance and/or software.
Get credit terms if you can.
– Corporations of any decent size should be able to negotiate payment terms of up to 30 days. This basically gives you the opportunity to try before you buy. If the equipment doesn’t meet your standards, you can return it without trying to recover your payment. If the first three precautions are taken, you shouldn’t have any surprises, but it doesn’t hurt to be cautious (and get on credit)!

While there are sharks out there, manufacturer’s will over-hype their presence but these tips will help you navigate through the calm waters of the used IT marketplace.