HITS

Dell’s fiscal fourth quarter results (ended Feb. 3) were helped by market share gains achieved in both its server and networking offerings Infrastructure Solutions Group (ISG) and PC business Client Solutions Group (CSG), the company shared March 30.

ISG had “a solid quarter, with share gains in key product areas,” including all-flash arrays, converged integrated infrastructure, hyperconverged infrastructure and service, Dell EMC president David Goulden said on an earnings call. The company “executed well in the growth areas” of its business, but “there continues to be pressure in traditional solutions as customers balance spend between IT and digital transformation initiatives,” he told analysts.

The company’s ISG revenue totaled $8.4 billion in the fourth quarter, including $3.6 billion in servers and networking (up 12% from a year earlier) and $4.8 billion in storage. The operating income of $1 billion it reported for the division accounted for 12% of revenue, Goulden pointed out. “In servers, we outgrew the market to regain the number one unit share position on a global basis,” he said, citing IDC data. “The strength was driven by our mainstream PowerEdge business, where we gained approximately 600 basis points of year-on-year revenue share against our closest competitor,” he told analysts without naming the rival.

Dell’s high-volume cloud server business declined, but it “tends to fluctuate quarter to quarter based upon customer order patterns,” Goulden said.

He told analysts: “While we were very pleased with the velocity of the server business this quarter, we continue to work to improve our cost structure and ensure we have the right solutions at the right price points to meet our customers’ needs. We continue to invest in this business and look forward to announcing our next-generation of servers later this year.”

Dell’s networking business grew about two times greater than the total market and had its “highest level of revenue in eight quarters, driven” in part by its open networking strategy, he said.

Storage revenue was “up substantially due to the impact of the Dell EMC transaction,” he went on to say.

This was the company’s second quarter of combined company results after last year’s merger of Dell and EMC Corp. to form Dell Technologies.

Dell’s CSG fourth-quarter results were helped by the total PC market performing “better than expected,” CFO Tom Sweet said on the call. Global PC unit shipments dipped 1.7% in the quarter, according to IDC data, and that was better than IDC’s forecast of a 4.2% decline, he said. Also according to IDC, Dell “outgrew the market by 9.9 percentage points” in the quarter and the company has now gained market share for 16 straight quarters, he said.

Dell outperformed the global PC market in desktops and notebooks in the commercial and consumer sectors during the quarter, Sweet told analysts. It shipped 11 million PCs in the quarter, the largest volume of products it shipped since the fourth quarter of 2011, he said.

Providing an update on the merger between the Dell and EMC businesses, Sweet said: “The team’s done a pretty good job navigating the first part of this integration, knowing that we’ve got a lot more work to do.” He added: “I’m reasonably pleased with where we are as we step out of “ fiscal year 2017 and enter fiscal year 2018.

Since closing the EMC transaction, Dell Technologies has paid down about $7 billion in debt and repurchased $824 million of Class V common stock, the company said in its earnings news release.

Total Dell Technologies fourth-quarter revenue grew to $20.1 billion from $12.7 billion. But its loss for the quarter widened to $236 million from $155 million. Its shares were up 1.33% at $64.75 in late morning trading March 30.