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Dell may have seen a significant drop in revenue and earnings for its fiscal third quarter 2013 over last year, but the quarterly results are the clearest indicator yet that Dell has gone far on its transformation from a PC company to a full-fledged provider of enterprise products and services.
Dell's PC and mobility business dropped significantly from last year, but its enterprise product and services business registered strong gains as Dell continues to transform itself into an enterprise solution provider.
It has been a long transformation, said Brian Gladden, sales vice president and CFO of Dell.
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"Four years ago this month we embarked on our strategy to deliver end-to-end solutions," Gladden said.
For its fiscal third quarter 2013, which ended Nov. 2, Dell reported revenue of $13.7 billion, down 11 percent from the $15.4 billion the company reported during its third quarter of 2012.
Product revenue for the quarter fell 13 percent over last year to $10.7 billion, while services revenue fell 1 percent during the same period, Gladden said.
GAAP income for the fiscal 2013 third quarter was reported as $589 million, or 27 cents per share, down 48 percent from last year's $901 million, or 42 cents per share. Non-GAAP income for the quarter of $886 million or 39 cents per share was down 31 percent from last year's $1.1 billion, or 50 cents per share.
Dell's server and networking business grew 11 percent year-over-year, which Gladden said represented the 12th consecutive quarter of growth for the business. However, that growth was by far overshadowed by a 19 percent drop in desktop and mobile client device revenue and a 37 percent drop in third-party software sales related to the mobile devices, he said.
In terms of specific products, Dell's server revenue grew 4 percent over last year driven by the introduction of Dell's 12G (12th-generation) servers. Those servers now account for two-thirds of Dell's server revenue, Gladden said.
However, the real highlight of Dell's enterprise business is networking, where revenue rose 40 percent over last year. Gladden attributed that growth to the growth of the 12G servers as well as the introduction of 10-Gbit Ethernet products.