Dell reports 3rd quarter sales of $19.6 billion, lowers operating loss

Posted December 7th, 2017

Dell Technologies on Thursday reported a more than 20 percent year-over-year growth in sales for its fiscal third quarter, while also reporting that it lowered its operating loss.

Boosted by solid sales in PCs, servers and networking devices, the Round Rock-based technology giant reported $19.6 billion in sales, a 21 percent year-over-year revenue increase and 1.5 percent increase since its fiscal second quarter.

Dell reported a net loss of $941 million for the quarter, down from a net loss of $1.64 billion in the same quarter of the previous fiscal year. The company also said its operating loss for the quarter was $533 million, compared to an operating loss of $1.51 billion for the same quarter last year.

The financial numbers don’t yet provide a complete year-over-year comparison, as the previous fiscal year’s third quarter data didn’t reflect combined company earnings with EMC Corp., the data storage giant Dell acquired in September of 2016.

“Dell broke the rule of being hands-off before the merger had completed the approval process,” said industry analyst Rob Enderle with Bend, Oregon-based Enderle Group. “So while typically a merger of this size would result in a drag on revenue and profit for the company lasting between three and five years, instead they are showcasing performance closer to what you’d have at the end of that period rather than the beginning.”

Courtesy of Dell Technologies

Dell for some time now has been transforming itself from a company mainly concentrated in selling PCs into a multi-platform tech company that also offers storage, networking and server products, a shift accelerated by its blockbuster acquisition of EMC.

During its fiscal third quarter, Dell launched an Internet of Things division, which is a tech industry term for internet-connected non-computing devices. The company now employs about 140,000 people.   

With its purchase of EMC last year, though, Dell also acquired significant debt. The company said it paid down $1.7 billion in debt in its third quarter, which ended on Nov. 3, after paying down $1 billion in its second quarter. Dell’s total debt now stands at $52.5 billion, a $2.6 billion increase since its fiscal second quarter. 

The company also reported an operating loss of $533 million, which is $979 million less than its loss in its fiscal third quarter last year and $466 million less than in this year’s fiscal second quarter.

“The company is now very complex,” Enderle said. “Finding ways to reduce that complexity and improve efficiency is important as there is a much higher danger that mistakes made won’t be caught or corrected timely.”

Courtesy of Dell Technologies

While Dell is still a privately held company, it has been reporting its finances due to a stock it created through its purchase of EMC. 

As its integration with EMC continues, Dell is focused on continuing to learn and improve its new business models, the company’s chief financial officer Tom Sweet said in a call with investors after earnings were released.

"There is still work to do to improve our storage and data protection business and to improve the overall profitability of the (Information Services Group) business," Sweet said. "I’m generally pleased with the overall state of the business 14 months into the integration and believe we're tracking in the right direction."