Dell beats revenue estimates in first report as public company

Dell Technologies Inc topped Street estimates for quarterly revenue on Thursday in the computer maker’s first earnings report since a return to public markets and also forecast annual revenue above estimates, lifted by demand for its servers and network devices.

Dell, one of the top players in the PC market, returned to public markets on Dec. 28 after it bought back interest tied to the performance of software maker VMware, and shares have risen more than 22 per cent since then.

Revenue in its Infrastructure Solutions Group, which houses its servers and network device business, rose 10 per cent to USD 9.9 billion. Servers and networking revenue rose 14 per cent to USD 5.3 billion.

Client Solutions Group segment revenue rose 4 per cent to USD 10.9 billion. The unit holds its desktop PCs, notebooks and tablets, as well as branded peripherals business.

Excluding some items, Dell expects full-year 2020 revenue between USD 93 billion and USD 96 billion, mostly above analysts’ estimate of USD 94.11 billion, according to IBES data from Refinitiv.

Its expectations for annual adjusted earnings per share between USD 6.05 and USD 6.70 falls below Street estimates of USD 6.81.

Dell did not report earnings per share for fiscal 2019 due to certain transactions.

Dell Chief Financial Officer Tom Sweet referenced the dynamic macroeconomic environment in an interview to Reuters and said, “I don’t think full-year 2020 will be quite as strong from a year-over-year revenue growth perspective, but I do think that we will continue to improve profitability over the course of the year.”

Excluding impact of purchase accounting of USD 167 million, the company posted total revenue of USD 24 billion, above estimates of USD 23.83 billion.

For the fourth quarter ended Feb. 1, net loss attributable to Dell jumped nearly three-fold to USD 299 million. Operating expenses surged 13.7 per cent to USD 6.78 billion.

Separately, Dell unit VMware Inc beat fourth-quarter revenue and profit estimates on strong demand for its software to boost cloud computing efficiency, sending its shares up 3 per cent.

Forrester analyst Glenn O’Donnell is bullish on both Dell and VMWare.

“The companies have more than their share of critics, but both are executing well in ruthlessly competitive markets. You won’t see AWS-like growth numbers, but anyone who suggests these companies are dinosaurs - is just wrong,” he said, referring to Amazon.com Inc’s Amazon Web Services (AWS).

HP Inc on Wednesday reported quarterly revenue that fell short of estimates, due to weak demand in its printer as well as in its personal systems businesses.