Dell Technologies: 6 Takeaways From Q3 Earnings
The weak demand for Dell PCs was hedged by a lower cost of shipping and components, and a reduction in server backlog which drover better than expected infrastructure performance.
Infrastructure Sales Up
Dell’s Infrastructure support group performed better than expected with revenue leaping 12 percent year over year on sales of $9.6 billion. The company has grown ISG revenue for the last seven consecutive quarters.
Server and networking revenue comprised $5.2 billion up 14 percent, while storage revenue was higher by 11 percent to $4.4 billion, Whitten said.
“The server business, we saw slowing server growth. We had hinted at that -- not even hinted at that, stated that in Q2 and had anticipated coming into the quarter. I would say, look, it worsened over the course of the quarter vis-à-vis our Q2 earnings call,” he said. “And therefore, our server revenue growth of 14% on the P&L was aided by server backlog reduction. And we would characterize server backlog is now roughly in its normal range. Storage is a bit of a different story. It fared better. We saw growth across multiple storage categories, high-end HCI, PowerStore. I would say storage backlog remains somewhat elevated relative to historical norms, given the larger business we’re in.”