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DELL Rides on Strong Partner Base Amid Growing Challenges

Dell Technologies DELL is benefiting from an expanding partner base that includes the likes of Red Hat, Fujitsu, Wind River and Advanced Micro Devices AMD.

Dell recently announced that it has inked a partnership with Fujitsu to offer solutions that will accelerate the adoption and simplify the deployment of open radio access network (Open RAN) solutions for communications service providers (CSPs).

The combination of Dell’s Open RAN Accelerator Card and Fujitsu’s Open RAN compliant radio units will enable CSPs to deploy more efficient open RAN solutions.

Meanwhile, Dell expanded its partnership with Red Hat to offer new solutions that will help in deploying and managing on-premises, containerized infrastructure in multi-cloud environments.

The Dell-Red Hat combined solutions will help enterprises speed up the development and operations of cloud-native applications while removing IT management barriers and bottlenecks.

Moreover, Dell and Red Hat are co-developing a hybrid cloud solution that extends management of on-premises Red Hat OpenShift deployments across public clouds and the edge.

Additionally, in collaboration with Wind River, Dell is launching a new telecom cloud infrastructure solution for CSPs to reduce complexity and accelerate their cloud-native network deployments.

Dell also collaborated with AMD to launch the most powerful 17” AMD Advantage laptop, the Alienware m17 r5 Gaming Laptop.

The new laptop is integrated with AMD Ryzen 6000 series processors, AMD Radeon RX 6000 series graphics, and new AMD Smart Technologies. This laptop has been designed specifically to address the gaming sector as it will feature a new display technology — AMD Smartshift Max — to help boost gaming performance and save battery life.

Dell Prospects Dragged Down by Weak Demand

Dell’s prospects are suffering from a challenging demand environment in the Infrastructure Solutions Group (“ISG”). ISG offers servers and storage devices.

In the second quarter of 2022, Dell witnessed a shortage of parts and embedded integrated circuits, including power supplies and NICs in the reported quarter. ISG backlog, particularly servers, remained elevated.

In the Client Solutions Group segment, Dell witnessed weak demand in both Consumer and Commercial segments.

Lower PC shipment is expected to hurt computer makers like Dell, HP HPQ and Apple AAPL. According to the data compiled by Gartner, PC vendors shipped 72 million units in the April-June quarter of 2022, 12.6% lower than the year-ago quarter. Another independent research firm, International Data Corporation, revealed that PC sales were down 15.3% year over year to 71.3 million units in the second quarter.

Per IDC, HP, Dell and Apple registered a year-over-year decline of 27.6%, 5.3% and 22.5%, respectively, in PC deliveries.

In its third-quarter fiscal 2022 results, HP revealed that total PC units sold were down 7% on a year-over-year basis, resulting in a 3% year-over-year decline in its Personal Systems revenues. Similarly, Apple reported a 10.4% plunge in Mac revenues in third-quarter fiscal 2022.

These factors are expected to hurt Dell’s top-line growth in the near term. Dell expects fiscal third-quarter revenues between $23.8 billion and $25 billion, down 8% at the mid-point, with CSG declining in the high-teens and ISG growing in the low-teens.

Gross margin is expected to increase sequentially as the mix shifts to ISG. Operating expense is expected to decline sequentially.

Dell expects earnings between $1.53 and $1.79 per share, unchanged year over year at the mid-point.

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