Shares of Dell Technologies Inc. fell slightly in extended trading after the company issued a cautious outlook for the coming quarter.

That forecast followed a strong earnings beat, with the computer maker capping off its fiscal year with record-breaking revenue. Dell reported fourth-quarter net income of $606 million, up from a loss of $29 million in the same period a year ago. Earnings before certain costs such as stock compensation came to $1.80 per share. Revenue fell 11%, to $25 billion.

The results were good, with Wall Street analysts forecasting earnings of just $1.64 per share on revenue of $23.4 billion. For fiscal 2023, Dell delivered net income of $2.42 billion on record revenue of $102.3 billion, up 1% from the prior year. Full-year earnings came to $7.61 per share.

Dell also revealed that Chief Financial Officer Tom Sweet, 63, will retire at the end of the second quarter, at which time he’ll be replaced by current corporate controller, Yvonne McGill.

Dell co-Chief Operating Officer Chuck Whitten (pictured) said in a statement that the company drove record share gains and delivered strong profitability in fiscal 2023, despite operating in a challenging environment. “The long-term trends are in our favor, as data increases exponentially and we continue to help customers navigate the complexities of hybrid work, multicloud and edge,” he added.

Dave Vellante, chief analyst at SiliconANGLE sister market research firm Wikibon, said Dell did well to execute in a challenging macro environment, surprising many with its ability to soundly beat Wall Street’s estimates. He said that showcases the advantage of having such a large portfolio.

“When remote work was the theme, Dell’s PC business boomed,” Vellante explained. “As we exited the isolation economy, the ISG business picked up and now becomes the profit driver as PC demand significantly declines.”

Revenue from the Infrastructure Solutions Group rose 7%, to $9.9 billion. Within that segment, server and networking revenue rose 5%, to $4.9 billion, while storage added an additional $5 billion, up 10% from a year earlier. All told, the ISG delivered record revenue of $38.4 billion for the full year, up 12%.

“I’m encouraged at the performance of the storage business because it’s higher-margin,” Vellante said. “Servers will benefit in the future from a new product cycle in 16G.”

Strong infrastructure sales helped Dell offset the weakness in its Client Solutions Group, the business segment that covers personal computers and laptops. That business has been hit hard by rising borrowing costs and lower spending, with both consumers and businesses avoiding making major investments in new computer hardware. As a result, revenue fell 23% from a year earlier, to just $13.4 billion. Within the segment, commercial revenue fell 17%, to $10.7 billion, while consumer revenue plunged 40%, to just $2.7 billion. For the full year, the client group delivered $58.2 billion in sales, down 5% from a year ago.

“I’d like to see their long-term growth model get a bit higher into the 5% to 6% range — but it will need PC growth and new business lines like telco to kick in to do that,” Vellante added. “On balance Dell is proving that it can successfully execute on a strategy that is hardware-heavy but relies on supply chain efficiency, customer trust and strong financial discipline.”

Analyst Holger Mueller of Constellation Research Inc. agreed with that assessment, saying the company did exceptionally well to stay above the $100 billion revenue mark given the economic headwinds and post-pandemic hangover suffered by the PC market.

“A deeper look shows that the growth really came from Dell’s services, which are showing both resilience and profitability,” Mueller said. “Dell is reducing its sales and other costs while growing its R&D, and that’s the right strategy on the operating cost side, resulting in an improved gross margin for the full year. However, higher interest rates on Dell’s debts ate up that margin, meaning Dell is bigger but less profitable than before. So the question now is, can Michael Dell and team accelerate growth while keeping its debts under control? The first quarter will help to answer this.”

Dell may find it tough going. On a conference call, Sweet said the company is beginning to see a noticeable slowdown in corporate spending. As a result, he said, Dell is forecasting first-quarter revenue to drop by between 15% and 21% from the previous year.

The forecast was not what investors wanted to hear. Dell’s stock, which had gained more than 6% in the minutes after its earnings report was first published, swung to a loss and was down by more than 3% at the time of writing.

Dell has already taken steps to weather the storm. In early February, it announced that it will slash more than 6,000 jobs as part of a series of cost-cutting measures. It took a related charge of $367 million during the quarter.

Photo: Dell