The Dell Results – Your Tax Dollars at Work

Many in the financial press are moaning about Dell’s quarterly earnings (announced yesterday, see the results here).  A good example is CNBC’s Jim Goldman’s Tech Check column on the subject.  I think that most are missing the point.

Let’s look at a breakdown of the markets in which Dell sells, vs expectations.

(billions) Actual Expected
Large Enterprise $3.4 $3.6
Public $3.7 $3.4
Small/Medium Business $3.0 $3.0
Consumer $2.8 $3.0
Total revenue $12.9 $13.2

Where did Dell sell better than expected?  Only in the Public sector!  The government purchases were ahead of expectations, due to stimulus money.

Where did Dell sell worse than expected?  The Large Enterprise and Consumer sectors, which are the hardest hit by the downturn.  No surprise here (except perhaps to those analysts that did not revise their expectations).  Large Enterprises have been laying off people right and left for months. – they are purchasing anything except those things that directly produce revenue.  Similarly, over 10% of the consumer market is unemployed, and the rest are worried about losing their jobs, too.  They are not likely to be on a tech spending spree.

In my mind, the biggest news of all is that the sales to small and medium businesses were in-line with expectations.  In every recession that has been studied, it is the small and medium businesses that first reignite job growth.  If these businesses are buying technology, then hiring more people cannot be far behind.

That, my friends, is very good news.

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