Revenue in the fiscal first quarter gained 2.6% to $21.9 billion from $21.4 billion a year earlier, the Round Rock, Texas-based company said Thursday in a statement.<\/p>\n
Analysts projected $22.3 billion, according to data compiled by Bloomberg. Shares fell more than 4% in extended trading.<\/p>\n
After assembling a technology empire that sells everything from servers to networking software, chief executive officer Michael Dell has turned his attention to integrating the pieces.<\/p>\n
The company hopes collaborations across business units will bring customers from one unit to another and drive higher sales and profit, particularly for Dell\u2019s lower-margin hardware businesses. One example is the company\u2019s new offering that lets clients manage and maintain corporate PCs with a blend of Dell services and VMware Inc. software.<\/p>\n
Demand for Dell\u2019s servers and networking gear fell 8.8% in the period – a dramatic reversal from the double-digit sales growth the company\u2019s infrastructure unit has seen for more than a year.<\/p>\n
\u201cThe server business is tough in China,\u201d Tom Sweet, Dell\u2019s chief financial officer, said in an interview. \u201cWe saw all these large opportunities that did not make sense to us from a profit profile, and we decided that business was not business we wanted.\u201d<\/p>\n
Dell\u2019s business in China generates a high single-digit percentage of the company\u2019s total revenue, Sweet said. Some customers in the country are delaying orders because of the US-China trade war, but Sweet said Dell was \u201cwell positioned\u201d to deal with the tariffs that have already been planned.<\/p>\n
Shares fell to a low of $63.20 in extended trading after closing at $66.41 in New York. The stock has increased 57% since returning to the public markets in late December.<\/p>\n
Earnings, excluding some items, were $1.45 a share in the period ended May 3. Analysts, on average, estimated $1.20 a share.<\/p>\n
Dell reaffirmed its annual sales outlook of $92.7 billion to $95.7 billion in fiscal 2020, including VMware. Sweet said the company was \u201ctrending toward the midpoint\u201d of the forecast. The range suggested sales growth of 2.3% to 5.6% compared with fiscal 2019, when the company\u2019s revenue jumped 15% – a climb that Dell has described as an anomaly.<\/p>\n
Sales in Dell\u2019s infrastructure business unit, which includes servers and storage hardware, declined 5% overall to $8.2 billion in the period. Storage revenue fell 1%.<\/p>\n
Revenue from the PC unit in the quarter increased 6.2% to $10.9 billion, with corporate sales rising 13% amid Dell\u2019s efforts to provide more subscription services for its PCs. Companies are also buying new Dell machines to upgrade to Windows 10 operating systems. Falling component prices have aided the profit margin of the division, which accounts for about half of the company\u2019s revenue.<\/p>\n
Dell has been trading at a lower market capitalization than the value of its parts, including more than 80% ownership of VMware. That reflects investor concerns about the company\u2019s $48.6 billion in long-term debt and its exposure to the hardware market, which is affected by the cyclical forces of the economy and the US-China trade conflict. Dell said it paid down about $400 million of debt in the fiscal first quarter.<\/p>\n
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