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All is swell at Dell: Look, first storage share gain since closing EMC deal

Server/networking revenues receive a 41% bump

Dell revenues soared in its first fiscal 2019 quarter, compared to the year-ago period, with losses down two-thirds and server income leaping 41 per cent.

For the first quarter of the 2019 financial year – the three months to May 4 – revenues were $21.4bn, 19 per cent higher than the $18bn reported a year ago. The net loss was $538m, compared to $1.2bn last year.

Cash flow from operations was $1.2bn and there was double-digit growth in commercial client, servers, storage and VMware:

  • Infrastructure Solutions Group (ISG) – This pulled in $8.7bn in revenue, a 25 per cent increase. Operating income was $939m.
  • Client Solutions Group – Dell saw revenues of $10.3bn, up 14 per cent versus the first quarter of last year. Commercial revenue grew 16 per cent to $7.4bn and consumer revenue was up 7 per cent to $2.9bn. Operating income was $533m, a 64 per cent increase.
  • VMware – Dell's cloudy purchase earned $2bn in revenue for the quarter, up 12 per cent. Operating income of $613m.
  • Other businesses, including RSA, Pivotal, Secureworks, Virtustream and Boomi brought in $579m in revenues, up 9 per cent.

Jeff Clarke, vice-chairman, Products & Operations at Dell Technologies, said: "The great momentum we saw exiting last year for servers and commercial client continued through the first quarter. We gained share in PCs and servers during the first calendar quarter and, when the numbers are revealed, expect to gain share in storage, as well."

Wells Fargo senior analyst Aaron Rakers said Dell EMC noted strong demand in hyperconverged products – triple-digit growth year-over-year in the products.

Inside ISG, server and networking revenues leapt 41 per cent to $4.6bn from $3.3bn, backing up the latest IDC server tracker numbers.

Rakers said DRAM capacity per server was up 30 per cent year-on-year while storage capacity was up 11 per cent.

Storage revenues rose 10 per cent year-on-year to $4.1bn from $3.7bn. This will be Dell's first quarter of storage share gain since closing the EMC transaction. Rakers pointed out Dell EMC's combined share was 26.6 per cent in the prior quarter versus 31 per cent in the quarter prior to the EMC acquisition close.

Dell also announced it had added several hundred sales employees focused on storage during the quarter.

Rakers added: "It is interesting Dell EMC did not highlight growth in its all-flash offerings ... only highlighting its focus on NVMe solutions such as the new PowerMax offerings, as well as enhancements such as native replication in the new XtremIO 2 solutions." ®

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