Human Resources

Remote Workers, Learners Power Dell Sales

Dell's computer sales benefited in the second quarter from strong demand in the government sector and in education.
Matthew HellerAugust 28, 2020
Remote Workers, Learners Power Dell Sales

Dell Technologies shares jumped on Friday after the tech giant topped analysts’ estimates as stay-at-home workers and virtual learners fueled strong demand for laptops.

As Reuters reports, “The COVID-19 pandemic has led to a rapid shift to cloud, spurring demand for products that allow organizations to carry on, even as millions of people around the globe work from home to stay safe, and schools to hold virtual classes.”

For Dell, that translated in the second quarter into an 18% increase in consumer revenue for the business that includes computer sales while commercial-client sales slumped 11% as the economic downturn continued to weigh on small businesses.

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“In Q2, we saw strength in the government sector and in education, with orders up 16 and 24 percent, respectively, as parents, teachers and school districts prepare for a new frontier in virtual learning,” Chief Operating Officer Jeff Clarke said in a news release.

Dell saw a 56% increase in consumers using the company’s direct channels, with a 79% increase in orders online, driven in particular by consumer and gaming notebooks.

Overall revenue fell 3% to $22.7 billion while net income dropped to about $1.10 billion, or $1.37 per share, from $4.23 billion, or $4.47 per share. Excluding items, Dell earned $1.92 per share, beating estimates of $1.40 per share, as recent cost cutting drove higher-than-expected gross margins.

On news of the earnings, Dell shares rose 6% to $66.21 in trading Friday.

In the previous quarter, Dell implemented a hiring freeze and curtailed almost all corporate travel. “The company is also seeing lower facilities costs with most buildings now largely unoccupied and requiring less maintenance and cooling,” Barron’s said.

Dell’s Infrastructure Solutions Group revenue was $8.2 billion, well ahead of Street estimates, but sales of servers and data storage equipment fell with customers shifting spending to facilitating remote work.

CFO Tom Sweet told Barron’s that third-quarter revenues are typically flat to down 2% from the previous quarter; he thinks this year will be off a little more than that due to softness in the economy.