Dell's quarterly revenue misses estimates on PC weakness
Adds details on forecast in paragraph 4, executive and analyst comments in paragraphs 3, 5
By Zaheer Kachwala
Nov 26 (Reuters) -Dell DELL.N forecast fourth-quarter revenue below Wall Street expectations on Tuesday, weighed down by weaker demand for its traditional PCs and competition from rival server makers, sending its shares down more than 10% in extended trading.
Despite booming demand for the company's AI-optimized servers used to handle large artificial intelligence workloads, Dell's PC segment has been grappling with stiff competition from rivals and weak consumer spending amid an uncertain economy.
Enterprise customers are being mindful of their PC and IT spending in the short term, Dell executives said on a post-earnings conference call, adding that the company's consumer business was weaker than expected.
Dell forecast fourth-quarter revenue between $24 billion and $25 billion. The average analyst estimate is $25.57 billion, according to data compiled by LSEG.
"The entire PC market is in a transition period and moving towards on-device AI functionality which still isn't that defined and is expected to solidify in 2025," Gadjo Sevilla, senior analyst for AI and Tech at Emarketer, said.
Revenue from Dell's client solutions group, which houses its PC business, came in at $12.13 billion, below expectations of $12.43 billion.
Rival PC maker HP also provided a weak first-quarter profit forecast, while electronics retailer Best Buy trimmed its annual forecasts against the backdrop of weak consumer electronics demand.
Investors are also keenly eyeing Dell's costs after the company flagged in May that higher expenses to build AI-heavy servers and competitive pricing would hurt its margins.
"Interest in our portfolio is at an all-time high, driving record AI server orders demand of $3.6 billion in Q3 and a pipeline that grew more than 50%," Dell's Chief Operating Officer Jeff Clarke said on Tuesday.
Revenue from the company's infrastructure solutions group unit, which houses its AI servers business, rose 34% to $11.37 billion and beat estimates.
Dell reported revenue of $24.37 billion in the third quarter, missing estimates of $24.67 billion.
Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
