Updated:

Dell Technologies Inc. is back in the spotlight as a publicly traded company, but some might be wishing it wasn’t after it posted mixed earnings that saw revenue come up short on a decline in infrastructure sales.

The company reported fiscal first-quarter earnings before certain costs such as stock compensation of $1.45 per share on revenue of $21.9 billion, up 3% from a year ago. Wall Street was expecting earnings of just $1.21 per share on revenue of $22.24 billion.

Dell’s stock fell more than 3% in after-hours trading, suggesting that investors were hoping for better. Update: Investors were even more unhappy on Friday, knocking shares down by more than 10%.

One of the main reasons for the revenue miss was the weakness in Dell’s server and storage business. Dell said revenue from its infrastructure solutions group, which includes its storage products, fell 5% to just $8.2 billion, for example. Meanwhile, server and networking revenue also fell, by 9%. Hyperconverged infrastructure revenue, though, was a bright spot at least, growing by triple digits in the quarter just gone.

Dell Vice Chairman Jeff Clarke said in an earnings call with analysts that the company had struggled with slower demand for its products in China, though there are “certain large enterprise opportunities” that it’s hoping to take advantage of. He added that enterprises are “in the middle of a technology-led investment cycle.”

Clarke also said he was optimistic about the prospects of the new Dell Technologies Cloud platform, which was launched in the last quarter. The hybrid cloud platform is designed to help enterprises move workloads between on-premises infrastructure and the public cloud more easily, and is reportedly seeing a lot of interest from enterprise customers.

“No one is better positioned to deliver the solutions customers need to grow in the data era,” Clarke said. “One example is our new Dell Technologies Cloud platform jointly engineered with VMware to expedite customers’ moves to hybrid cloud environments.”

Analyst Patrick Moorhead of Moor Insights & Strategy said there were many factors involved in the 9% decline in server and networking revenue.

“I believe the market did shrink a bit and the company didn’t go after some low margin deals in China,” Moorhead said. “And the 2018 comparison was tough as it had 20%-40% growth in 2018.”

Still, Moorhead said Dell had strong revenue overall. “The strong profit numbers were a pleasant surprise as the company is currently in growth mode,” he said. “Profits are importan,t but driving topline revenue is the current company priority.”

Dell’s personal computer business, known as the Client Solutions Group, also remains a priority for the company, and it did pretty well in the quarter just gone, with revenue coming to $10.9 billion, up 6% from a year ago. But a deeper look at the numbers reveals a mixed bag, with commercial sales up 13% and consumer revenue down 10%.

Moorhead attributed the consumer revenue decline to slowing demand for PCs overall, but said certain segments there were doing better than others.

“Dell is doing well in growth and premium consumer markets like gaming and high-end notebooks, but isn’t aggressively going after lower-margin consumer business as there’s little residual value in services and support,” Moorhead said.

VMware Inc., of which Dell owns an 80% stake, is another closely-watched business, but that company, which reports its earnings separately, also failed to thrill investors despite beating earnings and revenue forecasts. VMware reported first-quarter revenue of $2.27 billion, up 13% from a year ago and narrowly beating consensus estimates of $2.25 billion. But its stock still fell by more than 3% in after-hours trading.

Dave Vellante, chief analyst at SiliconANGLE sister market research firm Wikibon, said the most likely reason VMware’s stock fell was because it failed to raise its full-year guidance, but said this was actually a “smart move” even if investors thought otherwise.

“Why get people too excited with all the economic uncertainty and geopolitical activity going on with China?” Vellante asked. “It’s better to surprise on the upside downstream. VMware is still very strong and will remain so for a while.”

Vellante was upbeat on Dell’s performance in general too, saying it had done especially well with its expense control to ensure it beat expectations on earnings.

“The bottom line to me is that it’s business as usual for Dell,” Vellante said. “But it was a kind of a ho-hum quarter and there is still lots of work to do.”

Analyst Holger Mueller of Constellation Research Inc. said Dell’s problems stem from the fact that it’s facing more headwinds as enterprise workloads move to the public cloud. Dell has been unable to establish itself as a major supplier to public cloud providers, he said, with the exception of some investments by its long-term partner Microsoft Corp.

“This quarterly revenue challenge is exactly what Dell argued it was trying to escape from by going private,” Mueller said. “Now, after doing a 180-degree turn on that and going public again, Dell needs to find a way to grow in the cloud era. Growth at VMware and Pivotal cannot make up for the traditional server sales reductions.”

Besides its main businesses, Dell’s progress in paying off its remaining $50 billion debt from its $67 billion acquisition of EMC Corp. in 2016 remains a big question mark for investors. And so there was some good news here, with Dell saying it had paid down around $400 million of this debt in the quarter, and is on track to pay off  $4.8 billion in total by the end of the fiscal year.

Earlier this month, Dell hosted its annual Dell Tech World event. There, company founder and chief executive Michael Dell (pictured) appeared on SiliconANGLE’s mobile livestreaming studio theCUBE and discussed his company’s efforts in emerging technologies such as edge computing and 5G:

Photo: SiliconANGLE