Text size
Demand for desktop PCs has increased as some offices reopen and companies find the need to replace equipment that was inactive during the pandemic.
Oksana Semak / Dreamstime.com
NOTE: SEIZED AT 4:30 PM Est
Dell Technologies posted better-than-expected results, driven by strong performance in its personal computer business. This is a change from the last few quarters, when the PC business was largely driven by high demand among consumers.
For its second fiscal quarter, ended July 31, Dell (ticker: DELL) posted revenue of $ 26.1 billion, up 15% from the previous year and ahead of the 25,500 street consensus forecast millions of dollars. The results show a 12% acceleration in growth in the April quarter.
Non-GAAP earnings were $ 2.24 per share, ahead of the $ 2.03 street call. Non-GAAP net income amounted to $ 1.9 billion, up 18% from the previous year, while adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, reached $ 3.3 billion, 7% more. Operating income was $ 1.4 billion, up 21%.
According to generally accepted accounting principles, the company earned $ 880 million, or $ 1.05 per share.
Revenue from products was $ 19.4 billion, up 16%, while revenue from services was $ 6.7 billion, up 12%. Gross margin was flat compared to a year ago, with 31%, despite constant restrictions on the supply of components. Although prices for many parts have risen, Dell has been passing on additional costs by charging more, a key factor in its ability to increase profits faster than revenue.
Dell said revenue from its customer solutions group, which primarily sells PCs, amounted to $ 14.3 billion, up 27% from a year ago. That’s well ahead of Street’s consensus for $ 13.5 billion and surpasses 20% growth in the April quarter.
The figures include 32% growth in commercial customers and 17% in consumer, an investment of the pattern of recent quarters. In the April quarter, for example, Dell saw 42% growth in consumer PC revenue and 14% in commercial PC revenue.
While Dell is experiencing strong growth in laptops as more companies prepare staff for a hybrid work environment, there is also a growing demand for desktop PCs, as some offices are reopening and needing to be upgraded. PCs that have been idle for more than 18 months. The general shift in preference for laptops tends to help PC makers like Dell, as they generally have a shorter lifespan and higher retail prices than desktop models.
The company said its infrastructure services group earned $ 8.4 billion in revenue, up 3%, just a touch below Street’s estimates. This includes a 6% growth in servers to $ 4.5 billion, from 9% in the April quarter and a 1% drop in storage system sales to $ 4 billion. Storage was flat in the April quarter.
The company said VMware (VMW) had revenue during the quarter of $ 3.1 billion, up 8% from the previous year, and according to street forecasts. Dell owns a controlling stake in VMware, but previously announced plans to separate the stake to the holders. Now the company plans to complete the transaction in early November.
Dell has paid $ 5.5 billion in debt this year and expects to increase the total to more than $ 16 billion throughout the fiscal year, using its share of a special dividend that VMware will pay its holders just before derivation. Dell expects debt rating companies to increase their credit rating to investment grade levels when this process is completed.
At Thursday’s regular session, Dell rose a fraction of $ 102.20, just a couple of dollars below the stock’s all-time high. Stocks have increased by almost 40% during the year.
Write to Eric J. Savitz at [email protected]