Dell Sales, Profit Top Projections on Persistent PC Demand

(Bloomberg) -- Dell Technologies Inc. reported quarterly revenue and profit that topped analysts’ estimates, buoyed by persistent gains in corporate spending on personal computers.

Fiscal second-quarter sales rose 15% to $26.1 billion, the Round Rock, Texas-based company said Thursday in a statement. That compares with analysts’ average estimate of $25.6 billion, according to data compiled by Bloomberg. Profit, excluding some items, was $2.24 a share. Analysts projected $2.03.

Like many competitors in the PC industry that have historically relied on one-time purchases of hardware, Dell -- led by founder and Chief Executive Officer Michael Dell -- is trying to transform into a seller of subscription-based services. Such services, including managing corporate networks and consulting on technology projects, provide recurring revenue streams and have wider profit margins.

For now, Dell still gets more than half of its revenue from corporate and consumer PC purchases, and has gotten a boost in the past year from demand for updated equipment that’s been driven by the shift to remote work and school.
 
“We had strong results again this quarter, with all business units growing,” said Chief Financial Officer Tom Sweet said in the statement. “We are creating long-term value by taking share, pursuing high-value growth opportunities and profitably growing and modernizing our core business.”

Net income in the period, which ended July 30, fell to $880 million, or $1.05 per share. Dell shares closed at $101.55 in New York and were little changed in extended trading. The stock has gained 39% this year.

Revenue from PCs rose 27% from a year earlier to $14.3 billion, a quarterly record. Sales to consumers were up 17%, compared with a 42% expansion in the prior period. PC sales to business and government agencies were up 32% to $10.6 billion.

Server and networking sales rose 6% to $4.5 billion. Storage hardware revenue was $4 billion, down about 1%.

Revenue from VMware Inc., a corporate software maker that is majority-owned by Dell, came in at $3.1 billion, up 8%. In April, Dell said it plans to spin off its stake in VMware, creating two publicly traded companies and raising cash to pay down debt.

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