Dell Technologies Inc. and HP Inc. reported revenue and earnings that showed consumers and companies continue to buy personal computers even as pandemic lockdowns ease in some parts of the world. The strong results didn\u2019t help the stocks, which declined in extended trading.<\/p>\n
Round Rock, Texas-based Dell said fiscal first-quarter sales rose 12% to $24.5 billion, compared with analysts\u2019 average estimate of $23.3 billion, according to data compiled by Bloomberg. HP reported revenue in its fiscal second quarter jumped 27% to $15.9 billion, also topping estimates by $1 billion. HP also raised its annual profit target.<\/p>\n
Despite the positive numbers, some investors are betting that PC growth is peaking and won\u2019t accelerate further, said Cross Research analyst Shannon Cross. Dell shares fell about 1% and HP dropped more than 6% in extended trading following Thursday\u2019s earnings reports.<\/p>\n
HP has experienced a surge in demand for laptops needed by people working and going to school remotely during the Covid-19 pandemic, and those sales are persisting, Chief Executive Officer Enrique Lores said. The drag on the company\u2019s performance is a continuing shortage of computer chips, which means HP can\u2019t match supply to the demand for its products, Lores said. That situation will persist until the end of 2021.<\/p>\n
Dell executives echoed the concern about chips, predicting component supply constraints will continue into next year. The company will price into its products the higher costs of memory chips and displays while watching the impact that may have on demand for computers, Chief Financial Officer Tom Sweet said.<\/p>\n
\u201cThese are things we\u2019re going to have to navigate through and they\u2019ll be with us for a while,\u201d he said in an interview. \u201cIn the long term we\u2019re very optimistic about this space. If the pandemic did anything it accelerated customers thinking that they need to invest in technology.\u201d<\/p>\n
Revenue in the second quarter typically increases about 6% sequentially, but will likely fall short of that this year, Sweet predicted.<\/p>\n
HP\u2019s PC-related sales rose 27% in the three-month period, which ended April 30. Dell reported a 20% revenue increase at its laptop and desktop unit. Palo Alto, California-based HP said notebook sales surged 47% from the same period a year earlier.<\/p>\n
HP\u2019s printer business had suffered from weak demand in the lockdown as companies held off on purchases of gear not needed in empty offices. But printing and supplies revenue rebounded strongly in the quarter, helped by more companies reopening their offices and stocking up again. Margins were hurt by increasing costs, Chief Financial Officer Marie Myers said.<\/p>\n
\u201cWe do expect revenue to be driven by available supply rather than demand,\u201d Myers said. \u201cComponents and logistics costs are headwinds.\u201d<\/p>\n
While Dell Chief Executive Officer Michael Dell is trying to reduce the reliance of his company on one-time hardware sales in favor of subscription-based computer services, PC purchases still generate about half of revenue.<\/p>\n
Sales from consumer PCs rose 42% to $3.5 billion in the quarter, the company said. That compares with a 19% expansion in the prior period. PC sales to business and government agencies were up 14% to $9.8 billion.<\/p>\n
Server and networking sales rose 9% to $4.1 billion from a year earlier. Storage hardware revenue was $3.8 billion. Services revenue rose 10% in the quarter to $6.45 billion.<\/p>\n