Tin box shifter Dell reported mixed results for its fiscal third quarter. Profits were better than expected, but revenues were slightly below Wall Street’s projections. Dell reduced its full-year forecast for revenue, due in part to tight supplies of Intel microprocessors.
For the quarter ended 1 November Dell posted revenue of $22.8 billion, up two percent year over year, but slightly below the Wall Street consensus forecast of $23.04 billion. Non-GAAP profits were $1.75 a share, ahead of the Street’s consensus forecast of $1.62.
Dell Vice Chairman Jeff Clarke said in a statement: “Dell Technologies is innovating and integrating solutions across our entire portfolio to create the technology infrastructure of the future for our customers. Our highly differentiated set of offerings enables us to continue to win in a consolidating industry, while also driving long-term value for all stakeholders.”
The company said it repaid about $1.1 billion in gross debt in the quarter and has repaid $3.5 billion in debt for the year.
CFO Tom Sweet said results were driven by a strong performance by VMware and Dell’s storage and commercial client businesses. “We remain focused on long-term profitable growth, growing faster than competitors and the industry, growing operating income and EPS faster than revenue and generating strong cash flow over time,” he said.
Revenue from the Client Solutions Group was up five percent, while that from the Infrastructure Solutions Group was down six percent. Storage revenue rose seven percent, while servers and networking declined by 16 per cent. VMware’s revenue rose 11 percent.
On a Tuesday afternoon conference call with investors, Sweet said Dell now expects revenue of $91.8 billion to $92.5 billion for fiscal 2020, down from the $93 billion to $94.5 billion it had predicted. The consensus view among Wall Street analysts had been that revenue would be $93.5 billion.
The company blamed the change on tight supplies of Intel microprocessors.
Sweet said Dell continues to see macro issues in China, and softening PC demand as the Windows 10 upgrade cycle nears completion. He added that those factors, as well as tight supplies of Intel microprocessors, leaves us slightly more cautious on fiscal 2021 growth.
He added that the benefit of component-cost deflation in 2020—in particular in memory chips—will wane as component costs rise in fiscal 2021.
