New Dell Inc. Will Focus on Innovation and Investment

Dell Inc. (NASDAQ:DELL) reported a mixed third quarter earnings report on Tuesday, with $0.54 earnings per share beating estimates by $0.07 while its $15.4 billion revenue numbers were flat year over year, missing analysts estimates by $250,000.

Additional nuggets from Dell’s third quarter earnings report included a six percent decline in consumer revenue and a two percent drop in government revenue. Desktop PC sales declined six percent while notebook sales dropped two percent.

On a positive note, the company reported a 4 percent sales growth in large enterprises. Server and networking revenue rose 13 percent year over year with a 10 percent increase in services revenues.

From the company’s results, the stock saw declines on Wednesday on revenue worries and a downgrade by FBN Securities to Sector Perform from Outperform. The firm also lowered the stock’s price target from $20 to $17, expressing concerns that hard disc drive (HDD) shipments could be negative in the 2012’s first quarter thanks to the Thai floods.

CEO Michael Dell said in the company’s earnings conference call that a “new Dell” will focus on innovation and investment. To support his statement, Dell noted the company’s $1 billion annual R&D run rate and its 5,000 patents (both granted and pending). He added that the firm’s Enterprise Solutions and Services segment will receive a $1 billion commitment and a 30% rise in sales resources.

On Friday, research firm Context said average prices for Dell enterprise hard drives increased three percent to 35 percent in October while its rival’s prices, including International Business Machines (NYSE:IBM), EMC Corporation (NYSE:EMC), and NetApp Inc. (NASDAQ:NTAP) were largely unchanged,” as these companies don’t rely on Dell’s “just-in-time” manufacturing model.

Competitors to Watch: Hewlett-Packard Company (NYSE:HPQ), Apple Inc. (NASDAQ:AAPL), Silicon Graphics Intl. Corp (NASDAQ:SGI), Super Micro Computer, Inc. (NASDAQ:SMCI), Intl. Business Machines Corp. (NYSE:IBM), Cray Inc. (NASDAQ:CRAY), EMC Corporation (NYSE:EMC), Microsoft Corporation (NASDAQ:MSFT), and Intel Corporation (NASDAQ:INTC).

A Closer Look: Dell Inc. Earnings Cheat Sheet: Strong Margins Continue as Net Income Rises>>