Computer hardware giant Dell Technologies late Thursday trounced Wall Street's targets for its fiscal fourth quarter, thanks to solid sales of servers, storage and infrastructure gear. However, Dell stock fell after the company offered a cautious outlook.
The Round Rock, Texas-based company earned an adjusted $1.80 a share on sales of $25.04 billion in the quarter ended Feb. 3. Analysts polled by FactSet had expected Dell earnings of $1.64 a share on sales of $23.42 billion. On a year-over-year basis, Dell earnings increased 5% while sales decreased 11%.
Dell's infrastructure solutions unit delivered a 7% increase in sales to $9.9 billion in the fourth quarter. Storage systems revenue rose 10% to a record $5 billion. Servers and networking revenue climbed 5% to $4.9 billion.
But Dell's personal computer sales fell 23% year over year to $13.4 billion in the fourth quarter. Commercial PC sales sank 17% to $10.7 billion while consumer PC sales plummeted 40% to $2.7 billion.
Dell Stock Retreats On Cautious Outlook
In after-hours trading on the stock market today, Dell stock initially jumped on the quarterly beat. But it later fell after executives gave a muted outlook on a conference call with analysts. In recent trades, Dell stock was down 3.2% to 38.90. During the regular session Thursday, Dell stock dipped 0.7% to close at 40.16.
"The broad caution in the (information technology) spending environment that we started calling out in Q2 persists as customers continue to scrutinize every dollar in the current macro environment," Chuck Whitten, Dell's co-chief operating officer, said in a written statement. "We expect at least the early part of fiscal 2024 to remain challenging."
Exiting its fiscal 2023, some industries continued to show growth such as financial services, transportation, construction and real estate, Whitten said. But Dell is seeing demand weakness from most other markets, he said.
"Underlying demand in PCs and servers remains weak and we are seeing signs of changing customer behavior in storage," Whitten said. "Though Q4 was a very good storage demand quarter, we saw lengthening sales cycles and more cautious storage spending with strength in very large customers offset by declines in medium and small business."
Dell hopes to outperform the information technology industry by gaining market share this year, Whitten said.
Dell Stock Ranks Fourth In Industry Group
On Tuesday, industry peer HP delivered mixed results for its fiscal first quarter ended Jan. 31. However, the PC and printer maker guided higher for earnings in the current quarter and full year.
Dell stock ranks fourth out of 14 stocks in IBD's Computer Hardware and Peripherals industry group, according to IBD Stock Checkup. But it has a subpar IBD Composite Rating of 44 out of 99.
Meanwhile, HP ranks seventh in the group with a Composite Rating of 37.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
