“I'm optimistic about long-term technology trends,” Dell Technologies CFO Tom Sweet told me. “You and I both know, these days, there isn’t less, but more data getting created.”
I talked with Sweet in person yesterday about how the Fortune 50 multinational tech company is finding growth opportunities amid a macro environment and hiring adjustments. Dell, based in Round Rock, Texas, recently reported Q2 revenue of $26.4B, representing a 9% growth rate year over year, driven by growth across the Client Solutions Group and Infrastructure Solutions Group, beating diluted EPS estimates.
In 2021, more remote work meant more demand for Dell’s desktops and laptops. But “coming into this year, we talked about how the PC demand environment would be a bit softer,” Sweet explains. “And the infrastructure business (servers and storage) would be a bit stronger,” he says. “So far, that's played out.” The company continues to “invest in strategic growth areas like telecom and multi-cloud solution capabilities that we’re building out,” Sweet says.
“Now, obviously, the client space is a little softer than what we had thought, given the global economic dynamics that are going on,” he says.
So, I asked Sweet how Dell plans to keep its momentum amid high inflation, rising interest rates, and consumers being pinched.
"In times like these, you tend to look for counter-cyclical opportunities," he explains. “Think about what industry verticals are growing right now—the energy industry, health care, defense and government spending. These are areas where you've got to take advantage of the opportunities.”
Another focus area is “making sure that our pricing strategies are appropriate for the market,” Sweet says. “Fifty percent of Dell’s revenue comes internationally, and currency fluctuation has been pretty significant,” he says. “Our selling prices are generally local currency.” As the dollar has strengthened, adjusting pricing “has been a careful balancing act,” Sweet says.
Areas where Dell's still hiring
In regard to cost control actions, “In early June, we decided to pause external hiring except for a few strategic areas, just to be prudent as we try to think through, ‘What does the back half of the year look like?’”
Sweet named the strategic areas:
- Dell's still hiring for its telecom business, which is focused on the 5G rollout, and helping providers put modern infrastructure into their networks, he says.
- “From a finance perspective, there are certain things that are not voluntary,” Sweet explains. “You've got to have the right statutory and tax reporting. In those areas, we’re hiring as well.”
- Dell's leadership team is also focused on developing young talent. “We continue to invest and hire in the undergraduate space,” Sweet says. “We wanted to ensure our entry-level programs into Dell, and our campus-level programs continue. We think the right thing to do over the long term is bringing that talent in, right out of school and develop them internally versus trying to go out and hire talent away from other companies.”
Speaking of talent, in a LinkedIn post on Wednesday titled “Culture is Key to Hybrid Work,” Michael Dell, CEO of the company, weighed in on the ongoing return to work debate. "From my experience, if you are counting on forced hours spent in a traditional office to create collaboration and provide a feeling of belonging within your organization, you’re doing it wrong," Dell writes. "Technology’s ability to create a do-anything-from-anywhere world, also enables you to create a strong corporate culture anywhere, all the time." When it comes to hybrid work, the company has empowered its managers, who have teams distributed around the globe, to talk with team members to decide what works best, Sweet says.
Before we wrapped up our conversation, I asked him what he does during his downtime when he’s not in the office strategizing. “I'm a big family guy,” Sweet told me. He and his wife hang out with their five grandkids, he says. And he’s into sports. “I grew up in Michigan,” Sweet says. “So I’m a long-suffering Detroit Tigers and Detroit Lions fan.”
Have a good weekend. Take care.
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