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Dell Technologies’ Financial Results

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Dell Technologies recently released its financial results for the third quarter ended Oct. 31. While the company reported strong profits, there was a slight dip in revenue and a continued weakness in corporate PC demand.

Revenue and Earnings

Dell’s revenue for the quarter stood at $22.3 billion, which is a 10% decrease compared to the same period last year. This figure fell short of the company’s earlier guidance range of $23 billion. Wall Street consensus, as tracked by FactSet, also projected revenue of $23 billion.

Adjusted earnings per share came in at $1.88, surpassing both the company’s initial forecast of $1.45 and the Street consensus of $1.46. Using generally accepted accounting principles, Dell earned $1.36 per share. The strong earnings were mainly attributed to several factors, including a shift towards higher-margin enterprise hardware products, reduced component costs, a lower tax rate, and lower-than-anticipated interest expenses.

Client Solutions Group

Dell’s Client Solutions Group, primarily consisting of PCs, recorded revenue of $12.3 billion for the quarter, showcasing an 11% decline from the previous year. This figure fell short of the Street consensus forecast of $12.9 billion. Commercial client revenue reached $9.8 billion, lower than the consensus estimate of $10.4 billion. Meanwhile, consumer client revenue stood at $2.4 billion, slightly below the Street consensus of $2.5 billion.

PC Market Outlook

Despite the ongoing weakness in corporate PC demand, Dell remains optimistic about the future growth of this market. The company still expects the PC market to bounce back and experience growth by calendar year 2024. However, Dell noticed that the improving demand observed during the summer months leveled off in September.

In summary, while Dell Technologies enjoyed strong profits, the company faced challenges with revenue and corporate PC demand. Nevertheless, Dell is hopeful for a rebound in the PC market in the coming years.

Dell Reports Strong Performance in Infrastructure Solutions Group

In its recent earnings report, Dell announced impressive revenue figures for its Infrastructure Solutions Group, which includes servers, networking, and storage hardware. The group recorded $8.5 billion in revenue, slightly surpassing expectations of $8.3 billion.

Notably, servers and networking revenue performed exceptionally well, reaching $4.7 billion above consensus at $4.4 billion. This represents a 9% sequential increase, primarily driven by the company’s highly sought-after “AI-optimized” servers.

However, storage revenue fell short of Street consensus, totaling $3.8 billion instead of the projected $4.1 billion.

One notable achievement for Dell was the doubling of its backlog for AI-optimized servers in the quarter. Furthermore, the company successfully shipped over $500 million worth of these servers during the October quarter.

Looking ahead, Dell will provide guidance for the January quarter during its conference call later today. Analyst estimates for the January quarter anticipate sales of $23.97 billion and profits of $1.82 per share. Additionally, Dell previously projected a revenue range of $90.4 billion, with profits of $6.30 per share for the entire fiscal year of January 2024.

Furthermore, Dell expressed confidence in a return to revenue growth in the fiscal year of January 2025 due to favorable market conditions.

During the latest quarter, Dell also repurchased $744 million of stock.

Overall, Dell shares have seen impressive growth this year, increasing by 87%.

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