Dell Revenue Tops Estimates on PC Boost From Virtual Learning

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Dell Technologies Inc. reported revenue and profit that topped analysts’ estimates, in a sign of strong demand for personal computers from workers and students stuck at home during the coronavirus pandemic.

Sales were $22.7 billion in the period that ended July 31, the Round Rock, Texas-based company said Thursday in a statement. Analysts, on average, projected $22.5 billion, according to data compiled by Bloomberg. The hardware giant reported earnings, excluding some items, of $1.92 a share, easily beating estimates of $1.38 a share. Dell shares rose about 4% in extended trading after the results.

Chief Executive Officer Michael Dell is once again looking to revamp the structure of his technology empire, this time to generate more value from his namesake company’s 81% stake in publicly traded software maker VMware Inc. Dell said in a July filing that it may look to spin off VMware. Any deal wouldn’t happen before September 2021 at the earliest, for a tax-free transaction, the company said.

In the meantime, the company has been contending with the pandemic-fueled recession, which has reduced corporate demand for its data-center hardware. But Dell’s efforts to refresh its PC lineup as consumers work, study and entertain themselves from home have paid off.

“We saw strength in the government sector and in education, with orders up 16% and 24%, respectively, as parents, teachers and school districts prepare for a new frontier in virtual learning,” Jeff Clarke, Dell’s chief operating officer, said in the statement.

Revenue from consumer devices jumped 18% to $3.2 billion, the company said. PC sales to business clients dropped 11% to $8 billion. Server and networking sales fell 5% to $4.2 billion. Storage hardware revenue declined 4% to $4 billion. VMware’s revenue climbed 10% to $2.9 billion.

Dell’s flexible buying options have struck a chord with business clients who want to adopt new technology without paying for all of it upfront. The company’s recurring revenue came in at $6 billion in the last quarter, up 15% from a year earlier.

Dell said that it paid off $3.5 billion of debt in the last period. The company has long-term debt of $43.6 billion as of July 31. After borrowing heavily to fund its acquisition of storage company EMC Corp., Dell is pursuing an investment-grade credit rating.

©2020 Bloomberg L.P.

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