Dell’s (NASDAQ: DELL) Q4 2013 earnings beat expectations but revenues and net income declined overall. Among the interesting twists: Dell’s earnings call and press release didn’t mention Windows 8 PC sales momentum at all, though the earnings call briefly mentioned some “touch” computing. Dell’s bigger focus: The corporate upgrade cycle from Windows XP and Vista to Windows 7. Here’s the background.
Dell’s year over year Q4 revenue fell 11 percent to $14.3 billion, and net income fell 30 percent. Year over year server revenue grew 5 percent, networking jumped 42 percent, Quest Software exceeded sales targets, but desktop and mobile revenue fell 20 percent. During an earnings call, Dell executives did not discuss the company’s pending $24.4 private equity buyout, nor did the company mention if any alternative bidders have emerged. Some investors say they plan to vote against the deal, but Dell is pressing forward.
And What About Michael Dell?
Meanwhile,Â Microsoft’s(NASDAQ: MSFT) Windows 8 launch in late 2012 apparently has not given Dell much of a lift. During a Dell earnings call this evening, three Dell executives — Director of Investor Relations Robert Williams; CFO Brian Gladden and Corporate Controller Tom Sweet — offered a bit more detail on Dell’s results. Michael Dell skipped the call because of his involvement in the pending private equity deal.
Gladden briefly mentioned the corporate Windows 7 upgrade cycle continues to offer long-term opportunities. Said Gladden:
“Weâ€™ve talked about the Windows 7 refresh, and the fact that all the data that weâ€™ve seen, all the conversations weâ€™ve had with customers, would lead us to believe that thereâ€™s still a significant refresh activity that has to happen in the next 12-14 months. Customer conversations would reinforce that.
I would say, as we sort of looked at the back half of the quarter, I think we got a little bit more comfortable with overall corporate IT spending, and would hope that as we head into the year that IT spending will be a bit stronger in this fiscal year than what we saw last year. And I think thatâ€™s a broad comment across the portfolio, the data center as well as the client environment.
But clearly, we are still of the belief that thereâ€™s a broad Windows 7 based refresh that will continue to play out as we move toward April 2014 with the transition with Microsoft.
The April 2014 transition essentially involves Microsoft pulling the plug on Windows XP, which could spark more Windows 7 upgrades.
Asked to estimate how many corporate PCs still require upgrades, Gladden said:
“I think thatâ€™s really tough to get at, but the data that weâ€™ve seen would suggest thereâ€™s still somewhere in the range of 40% of the corporate installed base for PCs that is XP or Vista that needs to be upgraded. So thatâ€™s, I think, pretty consistent with the data that we see for our installed base, and for what we hear from our corporate customers.”
And what about Windows 8 sales to businesses and consumers? Dell said nothing about the new operating system but did briefly point to growing touch-based computing momentum.
Said Gladden: “Weâ€™re seeing good adoption of touch and the supply of touch panels improved throughout the quarter.”
Um… That’s not exactly a big endorsement of Windows 8 sales. But it’s a start…