According to its forecasts, Dell Technologies Inc’s revenue and earnings for the current quarter are expected to be below Wall Street's estimates. The reason for this is the continuing slump in demand in the PC business, which is explained by consumers and enterprises putting off system upgrades.
Changing the course from a 6% gain on better-than-expected fourth-quarter results, Dell’s stocks dropped about 3% in extended trading following the forecast.
The PC maker which makes the majority of its revenue from personal computer sales faced a decline in demand after the Covid pandemic’s peak in corporate and consumer businesses. That said, this was partly offset by the high demand for storage systems and servers.
The revenues of the company's infrastructure solutions group which includes servers, storage devices, and networking equipment increased by 7% in the fourth quarter.
Dell forecasts first-quarter revenue to drop 17-21%. Meanwhile, the anticipated decline based on Refinitiv data was 17.4%.
On top of that, the company expects quarterly earnings per share of 80 cents, give or take 15 cents, below expectations of $1.25.
"Underlying demand in PCs and servers remains weak and we are seeing signs of changing customer behavior in storage," said Chuck Whitten, Dell’s COO.
"We saw lengthening sales cycles and more cautious storage spending with strength in very large customers offset by declines in medium and small business."
Dell's full-year earnings and revenue forecast was also disappointing for Wall Street, even though travel restrictions being lifted in China was expected to ease supply chain pressure and reduce the costs associated with components and shipping.
In addition, Dell announced that Dell Technologies' Chief Financial Officer Tom Sweet is going to step down from office by the end of the second fiscal quarter, with company veteran Yvonne McGill being appointed as his successor.
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