Ahead of a meeting with analysts Tuesday Dell said that year-over-year demand for its wares seems to have stabilized, and that it expects to report a slight sequential revenue increase in its fiscal second quarter, which ends July 31. That's the good news.
However it's also anticipating a "modest decline" in gross margins, because of higher component costs, competitive pricing, and an unfavorable mix of product and business-segment demand. That's the bad news.
And this stabilization Dell's talking about depends "significantly," it said, on market segment and geography. Translation: it's still brutal out there.
The best it can come up with is a long-term target of 5%-7% compounded annual sales growth, with operating income of about 7% of revenue, and cash flow from operations exceeding net income.
Exactly how far out it's talking is unclear but it said it depends on broad global economic improvement plus higher worldwide IT spending AND a sustained double-digit growth rate in demand for computer systems. This could take a while.
Dell CFO Brian Gladden said in a statement that "We continue to believe that customers are deferring IT purchases, and that we will see demand return to more typical levels at some point." How's that for speculation.
Dell's stock took a 3.6% hit in after-hours trading.
About Maureen O'Gara Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara
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