DELL stock tanked despite Dell Technologies Inc.’s (NYSE:DELL) fourth-quarter 2020 results topping earnings estimates, thanks to the strong growth of its services business. Despite beating estimates, this was the slowest quarterly growth in revenue as the company continues to grapple with softer data center businesses.
Q4 Revenue Tops Analyst Estimates
The PC maker reported a 1% growth in revenue in Q4 to $24.03 billion slightly edging analysts’ revenue estimate of $24 billion. The growth benefited from a 12% increase in services revenue, which offset the marginal drop in product sales. The company’s net income increased to $416 million, up from a $287 loss in the same period last year. Full-year revenue grew 2% to $92.5 billion.
The company’s Infrastructure Solutions Group continued to struggle, with YoY sales dropping 11% to around $8.76 billion, missing on analysts’ estimates of $9.61 billion. In the third quarter, the company indicated that the data center business remained challenged because of waning demand.
The company indicated that the trade dispute between the US would impact on its results. Dell cited the decline of server sales in China on the slowing business and indicated that most of it came before the coronavirus outbreak. Although there are fears regarding the economic impact of the coronavirus outbreak, the company noted that China has already been a tough market for some time now.
DELL stock is down 7.50% at $40.39 and made a new 52-week low of $40.22.
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Dell’s Fiscal 2021 Guidance
The company’s forecast for 2020 came short of Wall Street predictions, which is an indication that slowing corporate demand for PCs will impact the company. The company indicated that its adjusted profit for fiscal 2021 will be around $5.90 and $6.60 per share. On average, analysts expected an adjusted profit of $6.72 per share. Dell is expecting full-year revenue to be between $92 billion and $95 billion, which topped analysts’ sales estimate of $93.1 billion.
The company’s CEO, Michael Dell, is seeking to leverage the different segments of the business to offer customer high-value packages of software and hardware. Server demand is likely to bounce back this year, which will help boost Dell’s overall revenue.
DELL stock has fallen about 25% so far this year.
Featured image: DepositPhotos © sbotas
