Dell Technologies reported third-quarter revenue below estimates on Thursday, attributing it to a slower-than-expected recovery in the hardware and software market.
The company’s shares declined by 4 per cent after the announcement. The overall market witnessed a demand slowdown following the surge in electronic device sales during Covid lockdowns, driven by increased work-from-home measures.
In the third quarter, Dell’s client solutions group, encompassing its consumer and enterprise personal computer business, experienced a nearly 11 per cent revenue decline compared to the previous year, reaching USD12.28 billion. Analyst Mikako Kitagawa from Gartner noted that Dell faced similar challenges as other PC vendors but had a more significant impact due to weakness in the business PC market, a core segment for the company.
Despite challenges, Dell’s servers and networking business reported a 9 per cent increase in revenue from the second quarter, driven by customer interest in generative artificial intelligence, according to Chief Operating Officer Jeff Clarke. However, the server market faced difficulties with supply constraints for AI chips, particularly those made by Nvidia, crucial for running large language models like ChatGPT.
Dell’s third-quarter revenue came in at USD 22.25 billion, falling short of the estimated USD 23 billion, as per LSEG data. Nevertheless, the company revised its full-year earnings per share expectations to USD 6.63, plus or minus 10 cents, up from the previous forecast of USD 6.30, plus or minus 20 cents.
While Dell struggled, major PC chipmakers like Intel and AMD posted positive results, indicating a gathering recovery in the market ahead of the holiday season. The PC market is anticipated to benefit from AI demand, with research firm Canalys projecting accelerated adoption of AI-capable PCs from 2025 onward, making up approximately 60 per cent of all PCs shipped in 2027.
