Dell’s stock drops sharply following unexpected fourth-quarter loss

IT infrastructure and data center giant Dell Technologies Inc. saw its shares fall hard in extended trading today after missing earnings forecasts and posting a surprise loss in the fourth quarter.

The company beat revenue expectations, at least, thanks to record shipments of personal computers. However, investors couldn’t stomach the $29 million net loss, sending Dell’s shares down more than 11% during the after-hours session, following a steep decline. regular exchanges as well.

For the quarter, Dell reported adjusted earnings of $1.72 per share on revenue of $27.9 billion, up 16% from the same period a year ago. Wall Street was looking for a profit of $1.95 per share on sales of $27.5 billion.

Dell’s unexpected loss was a far cry from the $695 million profit it made in the same period a year ago. The company blamed it on a higher-than-expected effective tax rate for lower-than-expected profits, as well as higher operating costs that hit $1.65 billion from $475 million. one year ago.

On the other hand, Dell at least generated record revenue for the year. For its fiscal year 2022, the company posted sales of $101.2 billion, up 17% from a year ago.

Dell vice president and co-chief operating officer Jeff Clarke (pictured) chose not to dwell on the loss, pointing to performance in fiscal 2022, which he said was the best year in its history to date.

“We hit over $100 billion in revenue and grew 17% — a huge achievement and ahead of our long-term growth goals,” Clarke said. “For our customers, the biggest opportunity is to turn data into insights, actions and progress, and they prioritize investments in technology.”

Chuck Whitten, Dell’s other co-chief operating officer, said the company benefited from widespread digital transformation that accelerated growth in technology spending throughout the year. “We also made strategic progress in multicloud, edge, services as a service and telecommunications and launched solutions in these spaces, engaged customers and made investments to position Dell for growth. future,” he said.

Once again, the bulk of Dell’s revenue in the quarter came from its PC unit, the Client Solutions group. It recorded sales of $17.3 billion, up 26% from a year ago. The increase was primarily driven by commercial PC sales, which jumped 30% to $12.9 billion, with consumer PC sales up 16% to $4.4 billion.

Dell’s other core business is its infrastructure solutions group, which represents the data center servers, systems, networks and storage equipment it sells. It’s not as big as the PC business, but it still generated a massive $9.2 billion in revenue, up 3% from a year ago.

It was the first quarter in which Dell no longer had a formal relationship with its former subsidiary VMware Inc., meaning there was no more revenue either. Even so, Dell CFO Tom Sweet said the company generated a good return on investment from the VMware spin-off, adding $10.3 billion in cash flow and earning an investment grade thanks. to reduce its debt.

With financial results out of the way, Dell said it has created a new dividend policy under which it will pay quarterly cash dividends on its common stock. The initial dividend rate was set at $1.32 per share per year for fiscal 2023, or about $1 billion in total, the company said. The first installments will be payable in April.

Photo: SiliconANGLE

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