Dell's fiscal 2012 second quarter storage revenues, shrunk by lost EMC business, would have shown no growth or even a loss but for booming Compellent sales.
Overall storage revenues dropped 20 per cent year-on-year to $502m. The company's numbers indicate that Dell's sales of EMC-sourced storage dropped 61.6 per cent compared to the same quarter a year ago. Revenues from Dell-owned storage products, such as Compellent, EqualLogic, PowerVault and Ocarina, rose around 15 per cent to $393m.
Stifel Nicolaus analyst Aaron Rakers calculates that Compellent revenues, which Dell said had increased 97 per cent compared to the first 2011 quarter, were about $65m. He estimates that this means revenues from the other Dell-owned storage products were unchanged from the year-ago quarter or even slightly down. He thinks this continues a trend seen with Dell's EqualLogic sales last quarter.
The company cited a supply chain problem which has been rectified plus a revenue dip just before a new EqualLogic operating system delivery. Rakers thinks there might also have been some missteps in the running of the EqualLogic storage business, what he calls "executional challenge/confusion" around the closing of the Compellent acquisition.
According to Dell's Brad Andersen, SVP for the enterprise solutions group, revenues from Dell-owned storage in the small and medium business market were up 27 per cent year-on-year, with EqualLogic remaining the iSCSI storage leader. Compellent results reflected increased geographic cover, with Andersen saying in the earnings call: "We sold Compellent in 47 countries in Q2 compared to only 30 in Q1."
The transition from EMC storage to Dell-owned IP has beneftted profitability as: "Gross margin per cent has increased approximately 800 bps (basis points) over the past 12 months."
Asked about slackening storage growth, CFO Brian Gladden said: "We [have] just got to work through the tail of EMC and so we continue to be on a path that, by end of year, we should [see] positive storage growth overall and continue to be in double digits for Dell IP."
Compellent storage sales provided the boost needed to show revenue growth in Dell-owned storage products in the quarter. Without them the picture would have been very different. ®