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Dell Technologies: 6 Takeaways From Q3 Earnings

O’Ryan Johnson

The weak demand for Dell PCs was hedged by a lower cost of shipping and components, and a reduction in server backlog which drover better than expected infrastructure performance.

Dell Technologies, the leader in server storage and infrastructure, said those businesses carried it through a third quarter that saw consumer PC sales plummet 30 percent as overall revenue dipped 6 percent.

Executives with the Round Rock, Texas-based tech giant said the company was spared more difficult results thanks to its steady supply chain that allowed Dell to take advantage of lower shipping and component prices, and normalize backlogs in infrastructure devices as well as in PCs.

“With Q3 being deflationary and our lower inventory model, it allows us to access component deflation faster than the industry,” Dell’s co-Chief Operating Officer Chuck Whitten told analysts on the call. “And then when you couple that with our ability to see the demand signal quickly and react, we were able to lower OpEx as we put in the prudent cost controls.”

Whitten said Dell has also been able to reduce quarterly costs by $300 million with a slowdown in hiring and more strict expense management. Co-chief Operating Officer Jeff Clarke said a better supply chain allowed the company to take advantage of other market conditions.

“I think it’s worth emphasizing again, the logistics costs have come down,” Clarke said. “As supply now is ahead of demand, we’re able to put things on the ocean. We don’t have to expedite as much. We’re not using as much expedited air freight. Those all go into our input cost equation, which obviously helped us in the bottom line and the performance of this quarter.”

Scott Winslow, CEO of Dell Titanium Partner Winslow Technology Group in Waltham, Mass, said his company’s infrastructure business has been strong this year, driven by some of Dell’s storage products, while his Dell commercial PC business has slowed somewhat.

“Through Dell’s first three fiscal quarters, Winslow Technology Group continues to see strong demand for Dell server, storage, and networking solutions, with growth outpacing Dell’s growth year over year,” Winslow told CRN. “Dell PowerStore storage has been a standout solution for WTG. While our Dell CSG business has also increased during this timeframe, the growth rate has slowed versus this time last year.”

During the company’s earnings call Monday, Dell’s top executives talked about what was over the horizon for 2024, discussed its public cloud service APEX, as well as how supply chain and inventory management hedged a tough quarter. Here’s a look at six takeaways from the call.

 
O’Ryan Johnson

O’Ryan Johnson is a veteran news reporter. He covers the data center beat for CRN and hopes to hear from channel partners about how he can improve his coverage and write the stories they want to read. He can be reached at ojohnson@thechannelcompany.com..

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