Dell's lacklustre sales are not just hurting its business but also that of its parent company Denali Holdings, which saw a 2.4 per cent drop in sales during Q1 2017 when compared to the previous year.
Last Friday, the company reported that its own revenues in had fallen three per cent year-on-year to $12.6 billion. While they are technically two separate companies, these numbers may belong to Denali but can also be taken as an indicator for Dell's performance during that time period.
Denali attributes a significant portion of its losses to the cash acquisition of EMC in which it paid $63 million to purchase the company. Its Clinet Solutions group, of which Dell's PC sales are a part, was able to make $8.6 billion in sales this quarter but this number is still down by three per cent from what it was at this time last year.
There is some good news for Denali which was able to hit an operating income of $385 million which is up a staggering 75 per cent from the year before. Overall the company is satisfied with the results according to its Chief Financial Officer, Tom Sweet who said: “Overall, we were pleased with our results this quarter. We're continuing to make balanced decisions between growth and profitability, while making investments that position us to address our customers' critical IT needs in the data centre.”
Denali's financial results from this quarter echo many of the problems Dell faced in the computer business. It did see some growth in notebook sales in addition to a boost in products and services. However Dell's enterprise hardware business saw a two per cent revenue decline that brought it down to $3.6 billion. Operations income also fell by 20 per cent down to $192 million but Denali has written this off as a result of hiring new sales staff.
Storage revenue decreased by 2 per cent during the quarter and Sweet attributed this to a weaker storage market where customers are moving to flash software-defined solutions. The reported revenues of Dell's software division also remained flat at $334 million but its operating losses decreased by $61 million from the same period last year.
Sweet also gave more insight into Denali's financial results this quarter when he said: “In the quarter, net income was $55 million and Denali delivered approximately $660 million in adjusted EBITDA, and our cash flow from operations was $3 billion over the past year.
"We're committed to our long-term focus to grow revenue and profitability while generating strong cash flow.”
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