May 19, 2024


Digitally first class

Dell rides record PC sales to both consumers and businesses to an easy earnings beat

Dell Technologies Inc. rode record personal-computer sales to an easy earnings and revenue beat Tuesday afternoon, sending shares higher in after-hours trading.

reported third-quarter earnings of $3.89 billion, or $4.87 a share, on revenue of $28.39 billion, up from $23.5 billion a year ago. After adjusting for a one-time $3.6 billion transaction-related windfall as well as stock compensation and other effects, the tech company reported earnings of $2.37 a share, up from $2.03 a share in the same quarter last year.

Analysts on average expected adjusted earnings of $2.30 a share on sales of $27.37 billion, according to FactSet. Dell shares gained 1.5% in the extended trading session following the release of the results, after closing with a 0.8% decline at $54.67.

Personal computers have experienced a surge in sales during the COVID-19 pandemic, as videoconferencing, videogames and other services that can require the power of a newer PC have exploded in popularity. Dell’s PC division, known as the “client solutions group,” reported record quarterly sales of $16.5 billion, up from $12.29 billion a year ago and easily topping the average analyst estimate of $15.41 billion.

Dell said that revenue records were set both for consumer and business PC sales, with consumer sales totaling $4.3 billion, up 21% from last year, and enterprise revenue hitting $12.3 billion, a 40% gain that the company called “unprecedented” in its release.

Dell’s other major division, which focuses on servers and storage equipment and is mostly built from the 2016 acquisition of EMC Corp., reported revenue of $8.4 billion, up from $8.02 billion a year ago. Analysts on average were projecting revenue of $8.57 billion for the division known as the “infrastructure solutions group.”

The EMC acquisition also left Dell with majority ownership in VMware Inc.
but Dell completed the spinoff of its 81% stake in the software company at the beginning of this month. VMware also reported earnings Tuesday afternoon, disclosing adjusted earnings of $1.66 a share on sales of $3.19 billion, up from $1.66 a share on revenue of $2.86 billion in the year-ago period. Analysts on average were expecting $1.54 a share on sales of $3.12 billion, according to FactSet, and VMware shares gained more than 1% in after-hours trading following the report.

For more: VMware to finally come into its own in Dell spinoff, but strategic cloud remains

Dell stock has increased 47.6% so far this year, as the S&P 500 index
added 24.7%.