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Dell and HP Inc. concerned about sharp increase in computer sales

(Bloomberg) – Dell Technologies Inc. and HP Inc. reported revenue and profits that showed consumers and businesses continue to buy personal computers even as pandemic lockdowns ease in parts of the world. The good results did not help stocks, which declined amid extended trading.Round Rock, Texas, Dell said fiscal first quarter sales rose 12% to $ 24.5 billion, compared to analysts’ average estimate of $ 23.3 billion, according to data compiled by Bloomberg. HP said revenue in its fiscal second quarter jumped 27% to $ 15.9 billion, also beating estimates of $ 1 billion. HP has also raised its annual profit target. Despite the positive numbers, some investors are betting that PC growth is peaking and won’t accelerate further, said Shannon Cross, analyst at Cross Research. Dell shares fell about 1% and HP fell more than 6% in extended trading following Thursday’s earnings reports.HP saw increased demand for laptops needed by people working and going to distance school during the Covid-19 pandemic, and those sales are persisting, said chief executive Enrique Lores. The drag on the company’s performance is a continuing shortage of computer chips, which means HP cannot match supply with demand for its products, Lores said. This will persist until the end of 2021. Dell executives have echoed the chip concern, predicting that component supply constraints will continue into the next year. The company will include the higher costs of memory chips and displays in its products while observing the impact this may have on demand for computers, said chief financial officer Tom Sweet. I’ll be with us for a while, ”he said in an interview. “In the long term, we are very optimistic about this space. If the pandemic has done anything, it has accelerated customers into thinking they need to invest in technology. Second-quarter revenue typically increases about 6% sequentially, but will likely be lower this year, Sweet predicted. % over the three-month period, which ended April 30. Dell reported a 20% increase in revenue from its laptop and desktop unit. HP, based in Palo Alto, Calif., Said laptop sales were up 47% from the same period a year earlier. But printing and supplies revenues rebounded strongly in the quarter, helped by more companies reopening their offices and restocking. Margins have been affected by rising costs, said CFO Marie Myers. “We expect revenues to be driven by available supply rather than demand,” Myers said. “Components and logistics costs are headwinds.” While Dell CEO Michael Dell is trying to reduce his company’s reliance on one-off hardware sales in favor of subscription-based IT services, PC purchases still generate around half of revenue. Consumer PCs grew 42% to $ 3.5 billion in the quarter, the company said. This compares to a 19% expansion over the previous period. PC sales to businesses and government agencies increased 14% to $ 9.8 billion, while server and network sales rose 9% to $ 4.1 billion from the year previous. Storage equipment sales were $ 3.8 billion. Services revenue increased 10% in the quarter to $ 6.45 billion, while sales of VMware Inc., majority owned by Dell, reached $ 3 billion, up 9 billion %. In April, Dell announced that it would part with its stake in VMware, creating two publicly traded companies and raising cash to repay debt. (Updates with comments from Dell’s CFO beginning in fifth paragraph). now to stay ahead of the game with the most trusted source of business news. © 2021 Bloomberg LP

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