Ding dong Dell, servers in the well. Who pulled them out? Little PC stout

Client solutions to the rescue as infrastructure shrinks 7%

After all those costly company takeovers, Dell has reported that yet again good old-fashioned PCs came to its rescue to offset the continued slump in its server and storage business.

The Texan tech outfit last night filed a 1 per cent year-on-year rise in Q4 revenue for the period ended 31 January to $24bn. Operating profit came in at $717m versus a loss of $191m, Dell's first positive income figure since it returned to the stock exchange in 2018.

The Infrastructure Solutions Group (ISG) was down 11 per cent to $8.756bn: servers and networking crashed by almost a fifth (19 per cent) to $4.5bn; and storage down down 3 per cent to $4.3bn.

Jeffrey Clarke, Dell vice-chairman and chief operating officer, said on an earnings call the server decline was primarily caused by lower demand in China, which was down 35 per cent amid global tensions. He claimed Dell "didn't chase unprofitable server deals in a down market".

"We're planning for both the overall server market and our server revenue to return to growth, driven by higher value workload servers, increasingly more robust AI and machine-learning solutions and distributed IT requirements at the edge," Clark added.

On storage, the exec revealed Dell had consolidated its storage portoflio over the past two years from 80 to 20 products and it refreshed the mid-range line in May.

He said Dell had invested $1bn into "sales, coverage, capacity and marketing, including critical investment in storage specialists" and this will be seen in ISG results in this new fiscal year - assuming online rivals don't come and eat Dell EMC's breakfast, lunch and dinner.

"Earlier this month, we combined into one sales organisation, and we will realise the next level of synergies and cross-sell opportunities, like selling more storage and data protection to our server customers."

You can read more about the storage segment over at Blocks and Files, here.

However, it was the revival in the PC market - the place where Dell started in the 1980s - that helped prop up group numbers as the Windows 10 refresh continued to bring home the bacon for the business.

The Client Solutions Group (CSG) grew 8 per cent in Q4 to $11.77bn: commercial PCs climbed 10 per cent to $8.563bn; consumer was up a more modest 4 per cent to $3.2bn.

"We executed well," said Clarke, "taking advantage of tailwinds from the Windows 10 refresh cycle, declining component cost while navigating through CPU shortages and a dynamic tariff environment."

For the year, Dell's revenue edged up 2 per cent to $92.154bn: ISG was down 7 per cent to $34bn, with servers and networking sliding 14 per cent to $17.127bn and storage flat at $16.84bn. CSG was up 6 per cent to $45.8bn: commercial grew 11 per cent to $34.27bn, and consumer down 6 per cent to $11.56bn.

Dell's majority-owned Virtualization juggernaut VMware, acquired in the EMC-Dell borg back in 2016, also helped keep the business afloat with a 12 per cent jump in annual revenues to $10.9bn. Last year, the virty giant inked deals with Microsoft and Google to support its services, on top of a more extensive collaboration with AWS since 2017.

Having said that, VMware's stock is down 10 per cent after it missed its own revenue guidance, and said America's financial watchdog, the SEC, had "requested documents and information related to VMware’s backlog and associated accounting and disclosures. VMware is fully cooperating with the SEC’s investigation and is unable to predict the outcome of this matter at this time."

Dell said it paid $5bn in gross debt for the year, largely thanks to its recent offloading of infosec arm RSA Security for $2.07bn. It has now paid off $19.5bn of debt from its $67bn megadeal to buy EMC.

Unlike competitors Microsoft and HP, Dell did not say that the coronavirus outbreak would have an affect on its fiscal 2021. Last year, Nikkei reported that both HP and Dell would move a third of their notebook production out of China as trade tensions escalated. ®

Similar topics

Broader topics

Narrower topics

Other stories you might like

  • Twitter founder Dorsey beats hasty retweet from the board
    As shareholders sue the social network amid Elon Musk's takeover scramble

    Twitter has officially entered the post-Dorsey age: its founder and two-time CEO's board term expired Wednesday, marking the first time the social media company hasn't had him around in some capacity.

    Jack Dorsey announced his resignation as Twitter chief exec in November 2021, and passed the baton to Parag Agrawal while remaining on the board. Now that board term has ended, and Dorsey has stepped down as expected. Agrawal has taken Dorsey's board seat; Salesforce co-CEO Bret Taylor has assumed the role of Twitter's board chair. 

    In his resignation announcement, Dorsey – who co-founded and is CEO of Block (formerly Square) – said having founders leading the companies they created can be severely limiting for an organization and can serve as a single point of failure. "I believe it's critical a company can stand on its own, free of its founder's influence or direction," Dorsey said. He didn't respond to a request for further comment today. 

    Continue reading
  • Snowflake stock drops as some top customers cut usage
    You might say its valuation is melting away

    IPO darling Snowflake's share price took a beating in an already bearish market for tech stocks after filing weaker than expected financial guidance amid a slowdown in orders from some of its largest customers.

    For its first quarter of fiscal 2023, ended April 30, Snowflake's revenue grew 85 percent year-on-year to $422.4 million. The company made an operating loss of $188.8 million, albeit down from $205.6 million a year ago.

    Although surpassing revenue expectations, the cloud-based data warehousing business saw its valuation tumble 16 percent in extended trading on Wednesday. Its stock price dived from $133 apiece to $117 in after-hours trading, and today is cruising back at $127. That stumble arrived amid a general tech stock sell-off some observers said was overdue.

    Continue reading
  • Amazon investors nuke proposed ethics overhaul and say yes to $212m CEO pay
    Workplace safety, labor organizing, sustainability and, um, wage 'fairness' all struck down in vote

    Amazon CEO Andy Jassy's first shareholder meeting was a rousing success for Amazon leadership and Jassy's bank account. But for activist investors intent on making Amazon more open and transparent, it was nothing short of a disaster.

    While actual voting results haven't been released yet, Amazon general counsel David Zapolsky told Reuters that stock owners voted down fifteen shareholder resolutions addressing topics including workplace safety, labor organizing, sustainability, and pay fairness. Amazon's board recommended voting no on all of the proposals.

    Jassy and the board scored additional victories in the form of shareholder approval for board appointments, executive compensation and a 20-for-1 stock split. Jassy's executive compensation package, which is tied to Amazon stock price and mostly delivered as stock awards over a multi-year period, was $212 million in 2021. 

    Continue reading
  • Confirmed: Broadcom, VMware agree to $61b merger
    Unless anyone out there can make a better offer. Oh, Elon?

    Broadcom has confirmed it intends to acquire VMware in a deal that looks set to be worth $61 billion, if it goes ahead: the agreement provides for a “go-shop” provision under which the virtualization giant may solicit alternative offers.

    Rumors of the proposed merger emerged earlier this week, amid much speculation, but neither of the companies was prepared to comment on the deal before today, when it was disclosed that the boards of directors of both organizations have unanimously approved the agreement.

    Michael Dell and Silver Lake investors, which own just over half of the outstanding shares in VMware between both, have apparently signed support agreements to vote in favor of the transaction, so long as the VMware board continues to recommend the proposed transaction with chip designer Broadcom.

    Continue reading
  • Perl Steering Council lays out a backwards compatible future for Perl 7
    Sensibly written code only, please. Plus: what all those 'heated discussions' were about

    The much-anticipated Perl 7 continues to twinkle in the distance although the final release of 5.36.0 is "just around the corner", according to the Perl Steering Council.

    Well into its fourth decade, the fortunes of Perl have ebbed and flowed over the years. Things came to a head last year, with the departure of former "pumpking" Sawyer X, following what he described as community "hostility."

    Part of the issue stemmed from the planned version 7 release, a key element of which, according to a post by the steering council "was to significantly reduce the boilerplate needed at the top of your code, by enabling a lot of widely used modules / pragmas."

    Continue reading

Biting the hand that feeds IT © 1998–2022