Dell Technologies Inc reported quarterly revenue and profit that were better than expected on greater sales of PCs to businesses with employees working from home, even while server demand waned. Shares jumped 7 percent in extended trading.
Revenue was US$21.9 billion in the period that ended May 1, little-changed from a year earlier, the Round Rock, Texas-based company said in a statement on Thursday.
On average, analysts estimated US$20.8 billion, according to data compiled by Bloomberg.
Excluding some items, Dell generated earnings per share of US$1.34, easily beating analysts’ projection of US$0.95.
Dell CEO Michael Dell has been the architect of a strategy to offer diversified information technology. The company makes PCs, data-center hardware, cybersecurity products and other software.
The resulting empire was saddled with debt, which the company has prioritized paying down to have an investment-grade credit rating.
Dell reported that it repaid US$5.4 billion in debt during the fiscal first quarter, leaving it with US$48.4 billion in long-term debt.
To save costs during the recession caused by the COVID-19 pandemic, Dell has frozen hiring, raises, promotions and contributions to its employees’ 401(k) retirement plans, Bloomberg News reported this month.
During US President Donald Trump’s time in office, Dell has shifted its supply chain away from China where possible, to avoid the worst effects of US-China trade tensions.
That decision seems to have paid off, with Dell’s PC business holding up better than that of rival HP Inc, which on Wednesday reported declining PC sales partly due to supply disruptions.
Revenue in the current period would be “seasonally lower” than in prior years, Dell chief financial officer Tom Sweet told an investors’ conference call.
Sales in the three months ending in July are usually higher than in the fiscal first quarter, but that might not happen this year.
Dell withdrew its forecasts in March and Sweet did not offer further guidance on Thursday.
“We’re all navigating through a difficult time right now, but our focus has been on let’s get through this, let’s do the right thing and then let’s position the company properly to take advantage of the opportunities post-crisis,” Sweet said in an interview.
The opportunities include demand from the explosion of data, new fifth-generation wireless networks and edge computing, in which servers are located closer to customers rather than at far-way centers, Sweet said.
Fiscal first-quarter revenue in Dell’s PC division, called the Client Solutions Group, climbed 2 percent to US$11.1 billion compared with the same period the previous year.
Laptops sold to businesses in the quarter saw double-digit percentage unit and revenue growth, while mobile workstation computers saw high single-digit percentage revenue growth, Dell said.
Overall, the commercial PC business gained 4 percent to US$8.63 billion, whereas consumer PC sales declined 5 percent to US$2.47 billion.
Sales in Dell’s data-center hardware unit, called the Infrastructure Solutions Group, dropped 8 percent to US$7.57 billion.
Servers and networking gear sales fell 10 percent, while storage hardware dipped 5 percent.
The company said that it attributed the drop to customers spending more on “remote work and business continuity solutions” rather than server farms.
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