Dell Technologies: 6 takeaways from Q3 results

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O’Ryan Johnson

Weak demand for Dell PCs was offset by lower shipping costs and components and a reduction in server backlog, resulting in better than expected infrastructure performance.

Dell Technologies, the leader in server storage and infrastructure, said those companies carried it through a third quarter in which consumer PC sales fell 30 percent while overall sales fell 6 percent.

Executives at the Round Rock, Texas-based tech giant said the company was spared tougher results thanks to its resilient supply chain, which allowed Dell to take advantage of lower shipping and component prices and normalize backlogs in infrastructure equipment and PCs.

“With Q3 being deflationary and our lower inventory model, it allows us to access component deflation faster than the industry,” Chuck Whitten, Dell’s co-chief operating officer, told analysts on the earnings call. “And then when you combine that with our ability to quickly identify and respond to the demand signal, we’ve been able to reduce operating costs by implementing prudent cost controls.”

Whitten said Dell was also able to reduce quarterly expenses by $300 million thanks to a slowdown in hiring and tighter cost management. Co-Chief Operating Officer Jeff Clarke said a better supply chain allows the company to take advantage of other market conditions.

“I think it’s worth emphasizing again that logistics costs have come down,” Clarke said. “Now that supply is ahead of demand, we can put things on the ocean. We don’t have to accelerate that much. We don’t use expedited air freight that much. All of this feeds into our entry cost equation which obviously has helped us with the bottom line and performance for this quarter.”

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

“During Dell’s first three fiscal quarters, Winslow Technology Group continues to see strong demand for Dell servers, storage and networking solutions, with growth outpacing Dell’s growth year over year,” Winslow told CRN. “Dell PowerStore storage has been an outstanding solution for WTG. While our Dell CSG business has also grown over this period, the growth rate has slowed compared to this time last year.”

During the company’s earnings call on Monday, Dell’s top executives talked about what’s on the horizon for 2024, discussing its public cloud service APEX and how supply chain and inventory management underpinned a difficult quarter. Here’s a look at six takeaways from the call.

    Learn more about O'Ryan Johnson

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 on how he can improve his reporting and write the stories they want to read. He can be reached at [email protected]


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