Dell reported Q4 Results below street estimates!
Earning - Dell reported earnings per share (EPS) of $1.72 in the fourth quarter. It is well below the analyst's expectation by 11.79%. YoY, the earning has declined by 2%. The VMWare business spinoff’s impact on the diluted shares increased to 810 million, and it led to the fall in the earnings.
Revenue - The company reported revenue of (non-GAAP) $28 billion, up by 16% compared to the same quarter last financial year. The revenue reported by the company is 2.04% below the street estimation. Product revenues increased 17% YoY to $22.46 billion. Services revenues rose 11% YoY to $5.52 billion.
Revenue from different segments - Infrastructure Solutions Group (ISG) revenues was up 3% year over year to $9.2 billion. The upside can be attributed to a 7% growth in servers and networking revenues that totaled $4.7 billion. Client Solutions Group (CSG) revenues were $17.3 billion, up 26% YoY. Storage revenues were flat year over year at $4.5 billion.
EBITDA - The company reported adjusted EBITDA of $2.7 billion, up by 3% YoY. The adjusted EBITDA margins decreased by 130 basis points and stood at 9.6% in the December quarter.
Operating income - Non-GAAP operating income was $2.2 billion, up 1% from the year-ago quarter’s levels. Operating margin contracted 210 bps year over year to 13%.
Update on the balance sheet - The company holds $11.3 billion in cash and investment. The company has reported a debt of $16.1 billion as of 28 January 2021. The company cleared $10.6 billion of debt year to date, primarily funded with $9.3 billion in VMware dividend proceeds. Cash flow from operations was $3.1 billion in the reported quarter.
2022 Outlook - Dell expects first-quarter revenues in the range of $24.5 billion to $25.7 billion, suggesting 11% growth at the midpoint. For the fourth quarter, non-GAAP earnings are expected to be $1.25-$1.50 per share which translates to 2% growth at the midpoint.
Target Price - The 17 analysts offering 12-month price forecasts for Dell Technologies Inc have a median target of $65, with a high estimate of $78 and a low estimate of $54. The Dell share price tanked 7.76% on Friday and closed at $51.46.
Dell Q4 Results Review:
Even though the topline was above the street estimate but bottom-line missed the estimate by a considerate margin. The global supply chain shortage of semiconductors and rising freight charges have affected the company’s top line. The company has announced the launch of the new XPS 13 plus and the world’s first quantum dot OLED gaming notebook, Alienware 14 in the fourth quarter.