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Dell posted revenue of $25 billion for its latest quarter.
Dreamstime
Dell Technologies
posted better-than-expected financial results—despite continued weakness in the company’s personal-computing business—as corporate IT spending outpaced estimates.
But the company’s guidance fell shy of Street estimates, pressuring the company’s stock price.
Dell (ticker: DELL) also said that Chief Financial Officer Tom Sweet will retire after 26 years at the company, effective at the end of its fiscal second quarter. Sweet will be succeeded by Yvonne McGill, Dell’s corporate controller, who has been with the company for 25 years in various roles.
In after-hours trading, Dell stock was off 3%, at $38.95.
For its fiscal fourth quarter ended Feb. 3, Dell reported revenue of $25 billion, down 11% from a year earlier. The result, however, surpassed the company’s guidance range of $23 billion to $24 billion and Street consensus at $23.4 billion. Dell posted adjusted earnings of $1.80 a share, at the high end of the company’s forecast of $1.50 to $1.80 a share and above the Street consensus at $1.65.
Revenue in the company’s infrastructure solutions group was $9.9 billion, up 7%, and ahead of the Street consensus at $9.4 billion, with servers and networking revenue up 5% and storage revenue up 10%.
The company’s PC business, the client solutions group, had revenue of $13.4 billion, down 23% but well ahead of the Street consensus at $12.3 billion. In the quarter, commercial PC revenue was off 17%, while consumer was down 40%. The result largely reflected higher-than-consensus sales of commercial PCs.
Dell rival
HP
Inc.
(HPQ) this week reported a 19% revenue decline for its latest quarter, including a 24% drop in the company’s personal systems unit. HP’s consumer PC revenue was off 36%, with commercial revenue off 18%.
For the full year, Dell posted revenue of $102.3 billion, up 1%, with non-GAAP earnings of $7.61 a share.
On the company’s call with analysts, Sweet said the company expects April-quarter revenue to be “seasonally lower than average,” down between 17% and 21% sequentially. At the midpoint of the range, that implies revenue of $20.75 billion, falling shy of consensus at $21.6 billion. The company expects a headwind of about three percentage points as a result of foreign-exchange rates in the quarter.
Sweet says the ISG segment will be down in the mid-20s on a percentage basis sequentially, with CSG down in the midteens on the same basis. The company sees profits of 80 cents a share, give or take 15 cents, well below consensus at $1.25.
For the full year, Dell sees revenue off between 12% and 18%, worse than the Street consensus forecast for a decline of 9.6%. At the midpoint, a 15% decline would imply revenue of $87 billion, while the Street consensus has been $90.9 billion. The company sees full-year profits of $5.30 a share, give or take 30 cents, missing the Street consensus call of at $6.37 a share.
Chuck Whitten, Dell’s co-chief operating officer, said in an interview with Barron’s that the company is “navigating an uncertain start to the year,” but that Dell sees sequential improvement as the year unfolds. He notes that most PC downturns historically have run four to six quarters—and he thinks we’re nearing the end of the current downswing. In particular, he notes that 62 million notebooks were sold in the first nine months of 2020 and contends they are due for a refresh. He thinks IT budgets will stabilize, and that customers who remain overly cautious run the risk of falling behind competitors.
The company also announced a 12% boost to its quarterly dividend, to 37 cents from 33 cents. Dell bought back $260 million of stock in the quarter, bringing the total for the year to $2.8 billion.
Write to Eric J. Savitz at [email protected]
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