Dell Reports Sales Gain as It Considers Strategic Options
Dell reported an increase in revenue in the fourth quarter after a retooling of its sales team to target its biggest enterprise clients and a jump in corporate demand for servers, according to Bloomberg.
Revenue climbed 9 percent to $21.9 billion in the period ending Feb. 2, the Round Rock, Texas-based company said in a statement. Adjusted earnings before interest, tax, depreciation and amortization rose 13 percent to $2.47 billion.
Dell was aided by a general surge in demand for servers late last year. Global server revenue jumped 27 percent in the fourth quarter, while shipments rose 8.8 percent, buttressed by strong economies around the world, research firm Gartner said. Dell narrowly surpassed rival HPE in worldwide market share, notching 19.4 percent to HPE’s 19.3 percent, based on fourth-quarter revenue. IBM came in third, with 14.1 percent of the market.
Sales of Dell’s desktop and laptop computers rose 8.3 percent to $10.6 billion. The advance was led by sales to companies, which grew 9.5 percent to $7.3 billion. Demand from consumers increased 5.8 percent during the holiday shopping quarter. The company has prioritized selling computers to businesses because they buy more ancillary software and services, boosting the unit’s profit margins.
Dell, which includes VMware’s earnings in its financial statements, said VMware accounted for almost half of Dell’s overall $6.8 billion of cash flow in the last fiscal year, despite contributing a small share of overall revenue. Storage hardware business shrunk 11 percent to $4.2 billion. Less-specialized storage hardware has struggled in the public-cloud era.
CEO Michael Dell is also still weighing changes to his eponymous company’s corporate structure, including a possible reverse-merger with VMware or an initial public offering for Dell. VMware’s more profitable software offerings could boost the margins of the broader company as Dell contends with more than $48 billion of debt surrounding its 2016 acquisition of hardware-maker EMC.
The software company’s relevance to its parent can be seen in the numbers. VMware CEO Patrick Gelsinger said last week that the partnership between the two firms will yield $700 million in cost savings and other benefits this fiscal year.