Dell Reports Weaker Demand for Data-Center Hardware
Dell Technologies reported weaker demand for data-center hardware amid ongoing global economic concerns.
Total revenue increased 1% to $24 billion in the period that ended Jan. 31, the company reported on Thursday. Profit, excluding some items, was $2 a share.
Sales in the company’s infrastructure solutions unit, which provides equipment to data centers, declined 11% to $8.8 billion. Storage hardware sales decreased 3% and servers and networking gear dropped 19%, highlighting a slower spending environment among large corporate clients.
Dell said its personal computer division gained 8% to $11.8 billion in the fiscal fourth quarter. Commercial sales rose 10% due to corporate clients upgrading their computers to adopt Microsoft’s Windows 10 operating system. Revenue from consumers climbed 4% in the period.
For the full year, Dell's revenue was $92.2 billion, up 2 percent, and non-GAAP revenue was $92.5 billion, up 1 percent, over the prior year. The company increased its operating income to $2.6 billion from a $0.2 billion loss in the prior year and generated non-GAAP operating income of $10.1 billion, up 15 percent over the prior year.
“In fiscal 2020, we focused on integration and simplicity across our businesses and product portfolio to accelerate winning go-to-market solutions for our customers,” said Jeff Clarke, chief operating officer, Dell Technologies. “With more than $180 billion in revenue over the past two years and significant investments in research, innovation and breadth of capability, we have a uniquely advantaged position heading into the next digital decade.”
Dell said its fiscal 2021 guidance of between $91.8 billion to $94.8 billion in revenue does not include any impact from the coronavirus (COVID-19) at all, though executives did say they expect first-quarter revenues to be “negatively impacted,” especially in China.
“We’re going to have to navigate through some of the short-term dynamic that we’ve been seeing,” said Tom Sweet, Dell’s chief financial officer, during its fourth-quarter 2019 earnings call.
Dell added that the era of CPU shortages still isn’t over. The company expects shortages to persist throughout the first half of the year, though it didn’t name a specific vendor. Intel has reported CPU shortages extending through 2019.
Although COVID-19 precautions have already cancelled major shows, Dell said its Dell Technologies World conference will still take place May 4 in Las Vegas.