Dell Inc. (NASDAQ:DELL) posted a profit decline during the second quarter of 2012 to $732 million, or 42 cents per share compared with its $890 million profit, or 48 cents per share during the same period a year ago. The result is 3 cents short of the 45 cents per share average earnings estimate by 23 analysts, based on the data compiled by Zacks Investment Research.

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The company also reported an 8 percent decrease in the company’s revenue from $15.7 billion during the second quarter in 2011, to $14.5 billion this year, due to lower sales in desktop and mobility. The result is lower than the $14.7 billion consensus estimated revenue by analysts based on the Factset survey. Its adjusted operating income during the period was $1.1 billion, or 7.8 percent of its revenue.

Based on the company’s financial report, the Dell Inc. (NASDAQ:DELL)’s consumer business segment generated $2.6 billion. Its consumer segment declined significantly by 22 percent. The company’s storage was down by 13 percent, and its PC business units also declined by 13 percent year-over-year.

On the other hand, Dell Inc. (NASDAQ:DELL)’s server and networking business unit was up by 14 percent. The company also posted a 6 percent growth to $4.9 billion in its enterprise solutions and services year-over -year. Its revenue in enterprise solutions and services accounted for 34 percent of its consolidated and more than 50 percent of its margin. The company said the business unit annual growth rate is almost $20 billion.

In a statement, Michael Dell, chairman and chief executive officer of the company said the company is transforming its business for the long term to provide a differentiated value for its customers. He said, “We’re clear on our strategy and we’re building a leading portfolio of solutions to help our customers achieve their goals.

In addition, Brian Gladden, chief financial officer of the company said the company’s performance during the second quarter proved that their long-term strategy is effective. According to him, “We continued our progress in shifting the fix of our business to higher margin enterprise solutions, led by solid growth in our servers, networking, services, and Dell IP storage business.”

Furthermore, he admitted the growth in its PC business segment during the period was challenging due to tough macroeconomic, competition and continued focus on higher value solutions.

The company also announced the appointment of Marius Haas as president of Dell’s Enterprise Solutions. Before joining Dell Inc. (NASDAQ:DELL), Haas worked at Kohlberg, Kravis Roberts & Co L.P (KKR).

Dell expects a 2 percent to 5 percent decrease in revenue during the third quarter. The company adjusted its earnings to $1.70 per share for 2012, due to economic instability, competitive dynamics, and soft consumer business.

For the current quarter, Dell said it expects revenue to be down 2% to 5% from the second quarter. The company also said it is revising its full-year adjusted earnings outlook to at least $1.70 a share. Analysts were expecting a full-year profit of $1.90 a share, according to data from FactSet. Dell shares were down about 4% in after-hours trading.

Mizuho Securities had the following commentary:

Revenue slightly below expectations while EPS was better than expected.
As expected, Dell’s revenues came in at $14.5B versus consensus of $14.7B
with the shortfall primarily coming from PC sales as Dell continues to deemphasize
the business. The company’s EPS of $0.50 came in better than
consensus of $0.45. However the beat was primarily driven by lower than
expected tax rate ($0.02 of upside) and a vendor settlement that helped the
company’s gross margin by $70M or $0.03 per share after tax. Dell’s non-
GAAP gross margin of 22.6% compared with our forecast of 22.3% and its
operating margin of 7.8% was 40bp better than our estimate.

Enterprise business expanded while PCs and consumers declined.
Consistent with our checks, Dell continued to de-emphasize its PC business.
The company’s servers and networking business grew by 14% Y/Y and
services grew by 3%. Storage and PCs were down by 13% Y/Y and 11%,
respectively. Consumer sales were down 22% while consumer margin was
only 0.5%. The company experienced Y/Y declines in all business units and
geographic regions.

Full year EPS guidance significantly below expectations. Management
updated its full year EPS outlook to be at least $1.70, which now includes
$0.02-0.03 of dilution from the Quest acquisition. The company’s previous
guidance was at least $2.13 whereas consensus heading into the call was
at $1.90. Management’s guidance indicates that the company intends to
significantly de-emphasize its PC business as well as invest aggressively
in the business. Management’s low end implies a 17% drop in EPS from
F1H13 to F2H13 whereas it has historically experienced a drop of about 4%
(excluding FY11 when it benefited from restructuring initiatives).