Computer manufacturer Dell Technologies Inc (NYSE: DELL) revealed better-than-expected fiscal 2022 second-quarter revenues and earnings, mainly due to a surge in demand for personal computers. Despite the impressive results, the stock closed at $96.95, down $4.60 or 4.53% from the previous close. The reason is the company has warned about component shortages that are having a negative impact on the tech industry.
The Round Rock, Texas-based company reported second-quarter revenues of $26.12 billion, an increase of 14.70% from $22.78 billion from last year.
For the quarter which ended July 30th, 2021, Dell posted a net income of $880 million, or $1.05 per share, down 20% from $1.099 billion, or $1.37 a share in the quarter ended July 31, 2020.
Excluding amortization of intangibles, the impact of purchase accounting, transaction-related expenses, stock-based compensation expense, other corporate expenses, fair value adjustments on equity investments, and aggregate adjustment for income taxes, among others, the company recorded 2Q 2022 non-GAAP net income of $1.911 billion, compared with a non-GAAP net income of $1.621 billion in 2Q 2021. On a per-share basis, Q2 2022 non-GAAP earnings were $2.24 per share, up 17% from $1.92 a share in Q2 2021.
Refinitiv analysts had expected the firm to report earnings of $2.03 per share on incomes of $25.53 billion.
Tom Sweet, chief financial officer, Dell Technologies, said, “We had strong results again this quarter, with all business units growing. We are creating long-term value by taking share, pursuing high-value growth opportunities and profitably growing and modernizing our core business.”
Segment-wise,
- Products revenues increased 16% y-o-y to $19.394 billion.
- Services revenues were $6.728 billion, an increase of 12% on a y-o-y basis.
Depending on the nature of service,
- Infrastructure solutions group (ISG) revenues rose by 3% y-o-y to $8.432 billion. Specifically, servers and networking revenues increased 6% to $4.462 billion. However, storage revenues fell by 1% to $3.970 billion.
- Client solutions group (CSG) revenues were $14.263 billion, an increase of 27% from last year. In particular, commercial revenues were $10.573 billion, an increase of 32% from the prior year. Also, consumer revenues grew 17% to $3.690 billion.
- VMware revenue was $3.148 billion, up 8% from the year-ago period.
The company ended the second quarter with an order backlog of $46 billion, an increase of 24% on a y-o-y basis. Cash and investments stood at $13.60 billion at the end of Q2 2022. Dell has cleared a debt of $5.50 billion so far this year. Furthermore, the company anticipates clearing a minimum debt of $16 billion by the end of FY 2022.
The quarterly revenue beat and components scarcity are expected to keep the stock range-bound in the days ahead.
The historical price chart reveals that the stock of Dell is consolidating at 96 levels. The stock is also trading above its 50-day moving average, while the stochastics indicator is in the bullish zone. We are therefore expecting the stock to regain its uptrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
