On the Call: Dell CEO optimistic on corporate spending in current first quarter

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On the Call: Dell CEO Michael Dell

SEATTLE — Dell Inc., the third-largest computer maker in the world after Hewlett-Packard Co. and Taiwan’s Acer Inc., reports quarterly results toward the end of the season.

Industry watchers have already heard Intel Corp., the top supplier of the microprocessors that power computers, say consumer PC and server computer chips sold briskly in the fourth quarter while chips for workplace computers did not.

Just yesterday, HP echoed that sentiment.

But in results reported Thursday afternoon, Dell said it saw signs that businesses of all sizes had begun buying computers, too, during the November-through-January quarter.

CEO Michael Dell addressed in a conference call whether the growth could be chalked up to what insiders call the “budget flush,” where companies rush to spend every remaining cent of their annual budget by the end of the calendar year.

QUESTION: Did you see anything in January of February that would make you think strength in the large enterprise division could be chalked up to the budget flush?

RESPONSE: I think we were surprised at how rapidly that business came back in the latter part of last year. And I think we have been pleasantly surprised at how strong it has stayed. You sort of take this on a week-by-week basis, but there is a lot of refresh and a lot of spending that we are seeing. And it is fair to say that the signs are quite encouraging in the day-to-day orders that we see from that business.

So I would say there is clearly some end-of-year effect in that business, as customers had confidence that their budget wasn’t going to change as they got to the end of the year. They said, hey, what do we want to spend, and what do we want to spend that on. It was infrastructure; it was servers; it was storage. And we captured quite a bit of that.

But I think the budgets are in place for this year, and they have a lot of client refresh in them. They have a lot of server virtualization. They have a lot of storage virtualization. And we are well-positioned to go capture that. I think customers are spending with a lot more conviction at this point in the year than they were certainly at this time last year.