Dell Technologies and HP reported quarterly financial results that suggest a long-awaited recovery of the personal computer (PC) market is stalling. The shares of each company dropped in extended trading.
Revenue generated by Dell’s PC business declined 1 per cent to US$12.1 billion in its fiscal third quarter, falling short of estimates. While sales in HP’s PC unit rose 2 per cent to US$9.59 billion in the similar three-month period, which also missed the average estimate of analysts. “The PC refresh cycle is pushing into next year,” Dell Chief Financial Officer Yvonne McGill said on a call with analysts after the results.
HP President and Chief Executive Enrique Lores said in an interview that the release of Microsoft’s new edition of Windows software has not fuelled PC sales from corporate clients as quickly as in previous releases. The global PC market had seen a historic decline in recent years after a burst of demand for new laptops in the early months of the pandemic when students and corporate employees were stuck at home.
While signs of a rebound began to materialise this year, shipments again dipped in the third quarter, tech market research firm IDC said in October. PC makers had hoped that new machines touted as better for artificial intelligence (AI) workloads would spur demand. But “buyers have yet to see clear benefits or business value”, Mikako Kitagawa, an analyst at research firm Gartner, said in a report last month.
Dell shares fell about 10 per cent in late trading after closing at US$141.74 in New York. The stock had gained 85 per cent this year through Tuesday’s close. HP shares declined about 8 per cent after closing at US$39.10. HP stock had increased 30 per cent this year.
Dell is best known for its computer business, but the Round Rock, Texas-based company has enjoyed a renaissance of investor interest due to its high-powered servers for AI workloads. Earlier this month, Dell announced it was shipping servers with Nvidia’s new Blackwell semiconductors to cloud infrastructure provider CoreWeave.
Sales in Dell’s infrastructure unit including servers rose 34 per cent to US$11.4 billion in the period ended November 1, the company said in a statement. That is just ahead of the US$11.3 billion anticipated by analysts. Total revenue increased 10 per cent to US$24.4 billion, missing analysts’ average estimate of US$24.6 billion, according to data compiled by Bloomberg.
Dell shipped US$2.9 billion in AI-optimised servers in the quarter, executives said. The metric was a step down from the US$3.1 billion reported in the preceding period. “AI is a robust opportunity for us with no signs of slowing down,” Dell chief operating officer Jeff Clarke said in the statement. He touted orders of AI servers in the quarter hitting US$3.6 billion and growth “across all customer types”.
For the quarter ending in February, Dell gave a revenue outlook of about US$24.5 billion. Analysts, on average, projected US$25.4 billion. Adjusted earnings will be US$2.40 a share to US$2.60, compared with the average estimate of US$2.66.
HP’s outlook also failed to impress. Earnings, excluding some items, will be 70 cents to 76 cents a share in the period ending in January, the Palo Alto, California-based company said. Analysts, on average, projected 86 cents. “Weaker-than-expected Personal Systems sales and profit were the biggest drag on HP’s fiscal fourth-quarter results, and its below-consensus first-quarter EPS [earnings per share] guidance suggests little improvement in PC demand in the seasonally stronger December quarter,” Woo Jin Ho, an Analyst at Bloomberg Intelligence, said in a note after the results.
