Dell has seen its EMEA revenue streams flatten in the face of aggressive government cutbacks across the public sector.
Dell announced its global fourth quarter results overnight, which produced flat revenues of 2% for the quarter year on year, and 1% for the financial year. While the company posted increased profits (33%) for the year, the fourth quarter was something of a disaster – dropping by 18%. Much of this was blamed on the flooding in Thailand which knocked out the company’s storage supplies.
Dell’s Europe, Middle East and Africa (EMEA) President and General Manager Aongus Hegarty, told CBR that while the company’s international results reflect the strain on the global market, EMEA is host to its own unique problems.
The UK’s revenue was down 3% and up 5% year on year, much of which Hegarty attributes to a tightened public sector which has been hit hard by the Conservatives aggressive cut backs over the past few years. This saw Dell’s public sector business’ revenues fall by 2% for the quarter, and by 7% year on year.
"This has been consistent with other regions globally. We are now most definitely focused on how we can work with [public] institutions to see how we can increase productivity and efficiency with our products. We are really making sure that a Dell investment is seen as having a decent return on investment."
Hegarty believes that this approach has ensured Dell’s relative success in the sector, where other companies are seeing a much more significant decline.
"Our performance has been stronger than the market itself, so we’re very happy with that."
Dell EMEA will be continuing its push to ensure greater productivity and efficiency in the public sector, but the company does not expect the problem to right itself in 2012.
"I would expect public sector spend to stay difficult. Governments are still looking to reduce their spend there. We’re continuing to push the idea that our technology can help with making those savings," he said.
For the rest of EMEA, the star performer amongst the developed markets was Germany, which saw revenues rise 17% for the quarter and 9% on the year.
France was very flat, posting a revenues rise of just 1% for the quarter, and down 1% year on year. France is seeing similar public sector cutbacks to Britain.
The key boosts for Dell have been in emerging markets – Russia saw revenues increase by 200% for the quarter, and 66% year on year, while South Africa was another winner with 22% and 16% respectively.
Overall the company is continuing to transition to its core business away from a strictly hardware focus to work on services, software and network solutions in the Enterprise space.
Within hardware it continues to focus its energies on the enterprise and the medium to high-spec end of the market, rather than low-cost, low margin computing which is gradually being dominated by the Chinese.
The stratospheric growth of tablets and smartphones haven’t helped the traditional PC makers, as HP and Dell appear to be following IBM’s mid-90s business model and move to more service based models rather than as strict hardware manufacturers.
Hegarty told CBR that overall enterprise solutions and services are now worth 30% of revenue globally, and 50% of the overall gross margin.
"We remain focused on the transformation of our business, to solutions, services and enterprise. These have most certainly yielded strong financial performance both company wide, and specifically here in the EMEA," he said.
Dell made two significant acquisitions in 2012, storage specialist Compellent, and products and services provider Equilogic to further this goal. Dell is on the lookout for some more in 2012.
"Overall, we’ve had good consistency, good profitability, and strong cashflow generation for the year. This will continue to give us the opportunity to invest in key strategic areas, both inside our company and through acquisitions in the next year," Hegarty said.