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Dell's Even Sweeter on Storage

Storage and servers were Dell Computer Corp.'s (Nasdaq: DELL) fastest-growing segments in the most recent quarter, and analysts say they expect the trend to continue (see Dell's Q1 Profits Swell).

Dells first-quarter storage revenues of $315 million were up 65 percent compared to the year-ago quarter, and up 5 percent sequentially. Goldman Sachs & Co. analyst Laura Conigliaro writes in a research note that she expects those revenues to jump an additional 8 percent in the current quarter, to $343 million.

"I think you're going to continue to see growth in that storage arena that is consistent with what you've seen in the past," company chairman and CEO Michael Dell said on a conference call after the company reported its results yesterday.

Storage accounts for only 3 to 4 percent of Dell’s $36.9 billion annual revenues -- so it's not yet a substantial part of the company's overall portfolio. At the rate the segment is growing, however, it could soon become very important, according to Dushyant Desai, an analyst with U.S. Bancorp Piper Jaffray. "It is a nontrivial part of their overall business," says Desai. "Maybe in another one and a half or two years' time, it could reach the 10 percent level."

One thing that boosted Dell's storage sales during the quarter, and that promises to keep the money flooding in, is the company’s recent decision to manufacture rather than just resell the EMC Corp. (NYSE: EMC) Clariion CX200 product (see EMC, Dell Keep Dancing).

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