Dell share price drops after Q4 results despite posting 'record year'

Full year revenue was $101.2bn, increasing 17 per cent from $86.7bn for its last full year

Dell share price drops after Q4 results despite posting 'record year'

Dell's co-COO Jeff Clarke hailed a ‘record year' as the vendor surpassed $100bn in revenue for the first time driven by strong performance in both its commercial and consumer sectors.

Sales for the company's fourth quarter - the three months ending January 28 - stood at $27.9bn, up from $24.2bn for the same period last year. Full year revenue was $101.2bn, increasing 17 per cent from $86.7bn for its last full year.

Overall, net income from continuing operations for the full year was $4.9bn up from $2.2bn for the last full year, but the company made a net loss of $29m during the fourth quarter.

Non-GAAP net income for the quarter was recorded at $1.4bn, however.

Dell saw its share price tumble by around nine per cent in after-hours trading following the publication of the results as the vendor missed Wall Street expectations.

It made a loss of four cents per share for the fourth quarter but for the full year earnings per share rose 114 per cent to $6.26.

Non-GAAP earnings per share for the fourth quarter, meanwhile, was $1.72, down two per cent for the same period last year, while the full year figure was $6.22, up 27 per cent.

"Throughout FY21, we leveraged the depth and breadth of our portfolio to lean into the pockets of growth when and where they occurred," Clarke said.

"We executed with discipline, speed and precision. And in what was an extremely dynamic environment, we delivered record results.

"I could not be prouder of how our teams responded in Q4 and throughout this challenging year, delivering for customers worldwide the real business outcomes they need."

Dell's Client Solutions Group (CSG) delivered "record shipments, revenue and operating income", with revenue for the full year of $48.4bn, up five per cent, and operating income up seven per cent to $3.4bn.

Clarke credited the performance of Dell's consumer business, which recorded a 12 per cent increase in revenue to $13bn for the year.

The company saw a strong performance in its commercial PC sales - with commercial notebooks up 46 per cent on a unit basis and 28 per cent on an orders revenue basis.

"Resilient demand was driven by the fast-growing technology-enabled world where consumers can do anything from anywhere," Clarke added.

"Instead of going to work, school, entertainment, a restaurant or shopping, it all comes to us. The PC is the hub of this new economic model."

Dell's Infrastructure Solutions Group (ISG) did not fare as well, however, posting revenue of $32.6bn which was down four percent compared with the previous year.

Both servers and networking revenue, and storage revenue, fell by four per cent for the full year to $16.5bn and $16.1bn respectively, but Clarke said performance in the fourth quarter had improved.

"We saw demand in the second half of the year improve with our best results in Q4, as spend increased in the infrastructure needed to power the do-from-anywhere world," he explained.

Dell's VMware business experienced a "strong year" with revenue of $11.9bn, up nine per cent, and Clarke claimed the company's partnership with VMware has "never been stronger".

For the fourth quarter, the CSG group recorded revenue of $17.3bn, up 26 per cent year-over-year, driven by $12.9bn in commercial revenue and $4.4bn in consumer revenue.

ISG revenue for the fourth quarter was $9.2bn, up three per cent year-over-year. Storage revenue was $4.5bn, while servers and networking revenue was $4.7bn.

Looking forward, CFO Tom Sweet said: "For fiscal year '22, while the exact timing is fluid, we expect the global economy to improve as we move through the year.

"This should benefit ISG and VMware as the year progresses, particularly as our customers return to the office. We expect CSG strength to continue through the first half with tougher compares in the second half."