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Dell Technologies: Fiscal 3Q16 Financial Results

With EMC, one plus one not equal to two
By Jean-Jacques Maleval on 2016.12.09

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 Dell Technologies (Dell + EMC) for storage only

(in $ million) 3Q15 3Q16 9 mo. 16 9 mo. 16
Revenues 548 3,079 1,655 4,159
Growth   462%   151%

Dell Technologies, Inc. announced its financial results for its fiscal quarter ended October 28, 2016 for the first time integrating acquired EMC.

The numbers includes EMC transaction as of September 7, 2016 and prior quarters do not include EMC results. So the consolidated results of Dell Technologies fiscal third quarter include only 52 days of EMC and VMware's results.

Dell storage revenue is down 2% for the former quarter at $548 million. With EMC, it now reaches $3,079 million for the period.  

Last known quarterly public figures for storage revenue were $557 million in 2FQ16 for Dell and $3,347 million for EMC for 1FQ16 ended in March 2016, or a total of $3,904 million, far (-21%) from the figure of most recent quarter but with less than two months for EMC. If you add one third of revenue for EMC or around $850 million, result is $3,929 million for 3FQ16, a tiny increase from 1FQ16 for EMC alone.

It confirms the statistics of IDC in WW enterprise storage systems factory revenue published at the beginning of this month: $2,251 million for EMC and Dell together in 3CQ16, a 12.6% decrease from 3CQ15, into a global market down 3.2%.

Infrastructure Solutions Group (ISG including storage) performance was mixed in the quarter, with revenue of around $6 billion and operating income of $897 million.

ISG highlights in 3CQ16:

  • All-flash array demand grew high double digits to a nearly $2.5 billion run-rate, "2x the size of our closest competitor."
  • XtremIO amassed 3,000 customers and $3 billion in cumulative revenue in three years.
  • Enterprise hybrid cloud solutions revenue grew triple digits to a nearly $0.5 billion run-rate.
  • Strong performance of the hyper-converged infrastructure portfolio includes triple-digit year-over-year revenue growth for XC hyper-converged infrastructure products.
  • For converge and hyper-converged portfolio of blocks, racks and appliances, strong momentum in VxRail continued in 3FQ16 as the company has now received orders for 3,700 nodes from customers in 60 countries since launch in February of this year.
  • "In the mid-market, our SC series gained shared."
  • Softness realized in standalone hybrid storage arrays and servers.
  • PowerEdge servers are now integrated with DSSD, ScaleIO, and VxRack

CFO Tom Sweet commented: "Our ISG business was mixed as strength in our emerging solutions, including all-flash arrays, hyper-converged systems, scale-out NAS and software-defined storage and was offset by pressure and traditional external storage and softness in certain areas of servers."

ISG president Dave Goulden added:" Within storage, the legacy EMC business experienced some softness due to first, activity related to the close of the transaction and integration process, and second, the transition from standalone hybrid arrays towards converged and all-flash, which we are driving with our new offerings and declaration of 2016 as the year of all-flash for primary storage."

To read the earnings call transcript

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