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Dell’s Client Biz A Huge Drag On Q3, While Infrastructure Outperforms

Joseph F. Kovar

Despite record third fiscal quarter 2023 sales in Dell’s Infrastructure Solutions Group, including strong server, networking, and storage sales, the company’s Client Infrastructure Group took a big hit corresponding to the big drop in industry-wide PC sales.

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A strong quarter for Dell Technologies’ infrastructure business was not enough to overcome the company’s PC business, causing the company to see overall revenue for its third fiscal quarter to fall over last year.

For its third fiscal quarter 2023, which ended October 28, Dell reported total revenue of $24.72 billion, which was down 6 percent compared to the $26.43 billion reported for its third fiscal quarter 2022.

[Related: PC Slowdown Will Drain Shipments Through 2023: IDC]

The biggest impact to Dell’s fiscal third quarter 2023 came from a significant 17-percent drop in revenue for the company’s Client Solutions Group — which includes hardware desktop PCs, notebooks, 2-in-1s and thin clients, software, including end-point security, and peripherals, such as monitors, printers and projector — to $13.78 billion. This included a 13-percent drop in commercial revenue to $10.75 billion, and a huge 29-percent drop in consumer revenue to $3.03 billion.

The drop in Dell client sales comes as the PC industry as a whole is shrinking. Analyst firm IDC last month said worldwide PC shipments in the third quarter of 2022 fell 15 percent compared to the third quarter of 2021 to a total of 74.3 million units.

Of the top five vendors, Apple, which kept its No. 4 spot in terms of market share was the only one to see a rise in shipments, while Lenovo, HP Inc., Dell Technologies, and Asus all saw significant drops in shipments, Needham, Mass.-based IDC said at the time.

Dell’s Infrastructure Solutions Group, on the other hand, saw record third-quarter revenue of $9.63 billion, up 12-percent. That included a 14-percent rise in server and networking revenue to $5.20 billion, and an 11-percent rise in storage revenue to $4.43 billion.

Dell did exceptionally well during its third fiscal quarter as was expected, said Jeff Clarke, Dell’s vice chairman and co-chief operating officer, in a prepared statement. “Our innovation engine is operating at full throttle in strategic areas like edge, multicloud and as-a-service,” Clarke said.

Product revenue for the quarter was reported at $18.94 billion, down 10 percent year-over-year, while services revenue rose 6 percent year-over-year to $5.78 billion.

Total revenue for the quarter, while down 6 percent, still beat analyst expectations by $110 million according to Seeking Alpha.

For the quarter, Dell reported GAAP net income of $241 million, down 94 percent over the $3.89 billion the company reported for the same period last year. On a non-GAAP basis, Dell reported net income of $1.71 billion, or $2.30 per share, up from last year’s $1.31 billion or $1.66 per share.

Analysts had been expecting non-GAAP earnings per share of $1.61.

Dell shares fell 2.31 percent, or 97 cents, to $41.07 per share on the trading day. Shares continued to fall in after-hours trading by 1.90 percent, or 78 cents per share, to $40.29 per share a couple hours after the close.

Joseph F. Kovar

Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at jkovar@thechannelcompany.com.

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