Dell (DELL) this afternoon reported fiscal Q4 revenue slightly better than analysts expected but missed on the bottom line by a penny.
Revenue in the three months ended in January rose 2%, year over year, and 4%, quarter to quarter, to $16 billion, yielding EPS of 51 cents a share.
Analysts had been modeling $15.96 billion and 52 cents a share.
For the year, the company sees EPS of more than $2.13 per share, ahead of the consensus $2.05 per share. For the current quarter, the company sees revenue declining by about 7%, to around $14.9 billion. Analysts have been modeling revenue of $15.09 billion.
Chairman and CEO Mike Dell remarked that �Our customers think of Dell in much broader terms now, trusting us with their comprehensive IT needs, from the datacenter to the device. We are more committed than ever to both developing and investing in innovative solutions that deliver greater value and better outcomes for our customers.�
Chief financial officer Brian Gladden remarked that “Our full-year results are a strong reflection of the significant progress we made this year on our strategic priorities.�
Dell’s services business saw revenue rise 12%, while Dell’s owned storage product revenue rose 33%, despite a 13% decline, year over year, for the entire storage category. Server and networking products grew 6%, quarter to quarter and year over year, and consumer revenue slipped 2%. Consumer business revenue was weakest in the U.S., the company said, with non-U.S. sales rising 10%. Revenue from mobile products rose 1%, year over year, while desktop revenue was up 3%. Software and peripherals revenue was down 4%.
Dell repurchased $537 million of its shares during the quarter, for $2.72 billion in total for the year.
Dell will host a conference call with analysts at 5 pm, Eastern time, and you can catch the webcast of it here.
Dell shares are down by 42 cents, or 2%, at $17.82 in late trading.
Update: In the conference call following the report, CFO Gladden emphasized that the 7% quarter-to-quarter decline in revenue expected this quarter was mainly higher than the company’s typical 4% drop in Q1 because Q4 saw an extra, fourteenth week, making for a more challenging comparison.
Gladden noted that Dell’s mix of hard drives was less profitable than expected within its PC sales because the crisis in Thailand brought on by severe floods last year meant the company had to focus on procuring “high-end drives” for its customers, which have a higher cost to Dell.
The continued struggle of the U.S. public sector also put pressure on the business:
Our public business growth was impacted by the continued weakness in US public spending which did not improve during the quarter. This resulted in a more significant sequential decline and margin pressure than we would typically see in the business in the Fourth Quarter.
Gladden emphasized that gross margin improved, year over year, by 20 basis points, at 21.7%, although that was a decline of 1.4 percentage points from Q3′s level. Operating expenses declined by 10 basis points as Dell “effectively managed operating expenses,” giving it an operating profit margin of 7%.
Enterprise solutions and services accounted for 30% of revenue in the quarter, up from 24% three years ago, Gladden pointed out. And he noted that the company had seen success in its consulting business and in serving both enterprise and small-business customers:
Large enterprise saw broad based growth across both client and Enterprise Solutions and services. Our large enterprise services revenue increased 18% as we continue to expand our vertical expertise and develop service solutions that are relevant to our customers business needs.
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