Data center News
Dell’s 5 Big Earnings Takeaways: Supply Chain Woes, Price Changes And Record Sales
From supply chain woes and potential pricing increases ahead to its record-breaking $101 billion fiscal year 2022, CRN breaks down the five biggest takeaways from Dell Technologies’ recent fourth-quarter financial earnings report.
Dell ‘Adjusting Prices’ On Products ‘As Appropriate’
When asked about how Dell is managing price increases with its supply chain constraints, Dell CFO Tom Sweet said the company has been adjusting prices as appropriate as component costs are rising, particularly in the semiconductor space.
“We continue to take pricing actions to manage the impact of commodity and logistics cost variability,” said Sweet.
“Our perspective is to adjust prices as appropriate, we’re always mindful of the market dynamic around elasticity,” he said. “But we’re also in an inflationary environment and we see that across multiple industries. It’s appropriate that we adjust pricing and make sure that we’re getting appropriate value for our solutions.”
As costs go up, it’s being transferred into increased prices, Clarke said.
“As costs go up, it’s being transferred into price—whether that’s commercial PCs, whether that’s the premium consumer side of our business, we’re seeing the same thing broadly across the server base and the same is true in our storage base. So that cost is being transferred into price as efficiently as we can,” said Clarke. “We’re responding as fast as we can. And the higher levels of backlog, it’s less efficient at capturing it.”
An increased backlog because of supply constraints has not had a major impact on Dell’s profit as price increases have to flow back through the backlog. As component costs decline slightly in the first fiscal quarter, it will be offset by flat to probably slightly increasing logistics costs related to moving the components to where they are needed.