Dell: The year from hell
The verdict is back on Dell, and heads are rolling.
Revenue growth has stalled, income has dropped, the Securities and Exchange Commission (SEC) is investigating accounting and financial-reporting irregularities, and the executive team has been shuffled.
Not a good year (technically Dell's 2007 year, which ended in February).
Dell managed to nudge up sales 2 percent to US$57 billion, the first time in years the company has posted less than double-digit growth. And things are going from bad to worse: In the fourth quarter, revenue declined by 5 percent compared with the same quarter a year earlier, the first time Dell has seen revenue slip since 2001.
The income picture is even more disturbing. Dell's 2007 profit of US$2.6 billion was the same amount it posted in 2004, despite the fact that sales back then were US$16 billion less than in 2007.
To make matters more interesting, the SEC is conducting an investigation into whether the company misstated certain financial reports, which has led the Nasdaq to consider delisting the company's stock, a nearly incomprehensible turnabout for this once high-flying market darling.
In response to all of this, in January Dell booted CEO Kevin Rollins, and founder Michael Dell assumed those duties, promising to return the company to its glory days by shortening product-development cycles and developing new approaches to manufacturing and distribution. He admitted, however, it will be a haul: "We won't achieve our goals overnight, but we will achieve our goals," Dell said.
One interesting development: The company reports that "In the fourth quarter Dell's international unit shipments exceeded U.S. shipments for the first time in company history. This drove the mix of revenue from outside the U.S. to a record 46 percent of Dell's revenues."
Microsoft: Playing nice with Novell
Microsoft doesn't care who sells the platforms, as long as the sector as a whole is growing. The company's fiscal year ends in July, so to get a more up-to-date sense of how the company is faring, we looked at quarters that more directly map to calendar 2006. That approach shows revenue increasing 11 percent to US$46 billion, but profits slipping 9 percent to US$11.9 billion.
The profit dip isn't surprising, because Microsoft is in the process of pushing out so many new offerings, from Vista to new versions of Office and Exchange.
Think this stuff is inexpensive to develop? Microsoft spent more on R&D in fiscal 2006 -- US$6.6 billion -- than any of the other companies examined here, including IBM, which is more than twice as large.
Over the years, Microsoft has nicely balanced out its portfolio. Today its client segment (the various flavors of Windows) represents 30 percent of sales, while the server segment (Windows Server, SQL Server, Exchange Server) is 26 percent, and information worker (Office, Project) represents 27 percent of sales. Home and entertainment (Xbox and TV-platform products) accounts for 10 percent.
Perhaps the most momentous announcement for the company in 2006 is the news that Bill Gates will scale back his duties to part time in 2008.
And maybe Microsoft's second-most-surprising announcement of the year was a wide-ranging business and technology partnership with Novell intended to make it easier for companies to run, integrate and manage Linux and Windows in their environments while steering clear of patent and intellectual-property concerns.
As reported in Network World, "As part of the partnership, Microsoft will not assert its patents against individual noncommercial open source developers, nor will it assert its patents against individual contributors to OpenSuSE.org, whose code is included in the Novell SUSE Linux Enterprise platform, including both the server and desktop version.
"In addition, Microsoft said it will recommend SUSE Linux Enterprise for customers who want Windows and Linux products. Microsoft said it will distribute 70,000 coupons for SUSE Linux Enterprise Server maintenance and support, so that customers can benefit from the use of an interoperable version of Linux.
"In terms of interoperability, the two said they would jointly develop a virtualization offering for both Linux and Windows that would allow either to be the host or guest operating system."
