Corporate News

Dell Inc., NetApp Inc., NVIDIA Corp., and Teradata Corp. announced mixed financial results for their respective fiscal quarters. Additionally, Hewlett-Packard Co. (HP) announced that it has acquired Vertica Inc., a privately held analytics platform company, for an undisclosed amount.

Focal Points:

• NetApp reported that revenues for the third quarter 2011 increased 25 percent year-over-year to $1.268 billion, while net income rose 60 percent to $172 million. According to the vendor, its numbers would have been higher if it were able to supply enough Flash Cache I/O modules for its new FAS3200 and FS6200 arrays. Estimated revenues could have been $10 million to $15 million higher without this supply shortage, NetApp added. Meanwhile, NVIDIA reported financial results for the fourth quarter and full year 2011. Revenues for the quarter fell 9.8 percent compared to last year to $886.5 million, while net income grew 31 percent to $171.7 million. The quarter also included a $57 million credit, part of the Intel Corp. settlement that was booked as operating expenses (not as revenue), which translates to $37.1 million of extra income, said NVIDIA. For the full year 2011, NVIDIA reported revenues of $3.54 billion, an increase of 6.5 percent over last year. Additionally, the company swung from a $68-million loss in 2010 to a $253.1-million net income this year.
• Dell also announced earnings for the fourth quarter and fiscal year 2011. The company reported fourth-quarter revenues of $15.7 billion, a five percent increase compared to the same period last year. Net income for the quarter nearly tripled to $927 million, Dell added. Revenues from both product and services rose by five percent in the quarter to $12.75 billion and $2.9 billion, respectively. According to Dell, the big growth driver in product sales was servers and networking, with fourth-quarter revenues rising 16 percent over last year to $2.09 billion. However, storage sales, despite the acquisitions of EqualLogic and Compellent, fell four percent year-over-year to $574 million. With regard to services, Dell reported $656 million in outsourcing revenues, up only 1.5 percent year-over-year. Meanwhile, service projects revenues accounted for $190 million, up 5.6 percent. For the full year 2011, Dell reported product sales of $50 billion, up 14 percent, and services sales of $11.5 billion, up 25 percent. Total revenues amounted to $61.5 billion, an increase of 16 percent compared to 2010, and net income rose by 84 percent over last year to $2.63 billion.
• Teradata's senior management said that the company's financial results were not hampered by Oracle Corp.'s Exadata appliances or IBM Corp.'s acquisition of Netezza. For the fourth quarter 2011, the vendor reported total revenues of $548 million, an increase of 10 percent year-over-year. The company also announced that net income for the quarter only rose 1.2 percent over last year to $85 million. Hardware and software product sales rose 12 percent to $267 million, consulting services sales rose 11 percent to $156 million, and maintenance services sales rose seven percent to $125 million, Teradata added. For the full year 2011, Teradata reported a net income of $301 million, an 18.5-percent increase, against total revenues of $1.94 billion, a 13-percent increase. Product revenues rose 21 percent to $933 million, and services revenues rose seven percent to just over $1 billion, said Teradata. According to the vendor, this was the highest revenue growth that Teradata has seen in a decade and the highest number of new customers it pulled in during a year since 2002. Separately, HP announced that it has signed a definitive agreement to acquire Vertica, a privately held analytics platform company based in Massachusetts. HP said that the acquisition will enhance its capabilities for information optimization, adding real-time business analytics for large and complex sets of data in cloud, physical, and virtual environments. The terms of the deal were not disclosed, although HP expects it to close in the second quarter of its fiscal 2011 year, which ends in April.

Experton Group believes EMC Corp. and Intel cannot keep NetApp and NVIDIA down. Both continue to gain market share and are well positioned for future growth. In fact, NVIDIA is better positioned in the PC and smartphone markets than Intel, as graphics and video grow in importance. In a similar vein, Teradata continues to hold its own and gain ground. Its independence from NCR Corp. has enabled it to focus on its strengths and compete effectively against its competitors. On the other hand, Dell is making a comeback in the corporate space on the server side but its services and storage segments are struggling. Dell appears to be having trouble integrating and leveraging its Perot Systems unit, which is not surprising in that Dell’s strength is not in the type of relationship building that Perot requires. The shift from Dell reselling EMC storage to its own equipment is progressing slowly; however, long-term this should become a non-issue. IT executives should expect HP to make a string of software acquisitions, as its new CEO believes that the company must address HP's software gaps in order for it to compete more effectively against IBM and Oracle.