Grey box shifter Dell said it is pleased with its maiden results under its new go-to-market structure, even if it was kicked in the nadgers by rising component costs.
The Texas-based giant posted an operating loss of $1.5 billion on revenues of $17.8 billion.
Dell’s Client Solutions Group saw revenue rise six per cent year on year to $9.1 billion and operating income of $374 million.
Dells Infrastructure Solutions Group made $6.9 billion revenue, made up of $3.2 billion from servers and networking. This was a five per cent annual rise. It also made $3.7 billion from storage.
ISG’s profitability was hit by a spike in the cost of components such as memory, some spot prices for which Dell said have doubled over the last year. Operating income for this division fell to $323 million, with operating margin tumbling to five per cent, down steeply from 12 percent the previous quarter.
Dell Technologies CFO Tom Sweet said he was happy with the overall results in the first quarter of our new go-to-market structure
On a first quarter conference call, Dell Technologies president David Goulden said that although the vendor had tried to make the cost increases stick in the channel and its rate prices, this had not always been possible.
“Customers don’t like paying more [than] what they paid last quarter – that typically not being the case in IT. Typically, in the IT industry, there are expected price decreases on a sequential basis, not price increases.”
Memory spot prices had doubled year on year, with SSD component costs also up 20 percent or more.
Goulden added that the component cost hikes have been most acute in servers, where he said that Dell had gained on its closest competitor.
“A certain amount of the pricing increase will actually stick and yield the incremental return, others will not, because the customer either won’t go there, or somebody else in the market hasn’t increased their price and you wind up in a competitive environment.”
