Dell’s decent quarterly results were completely undercut by dire forecasts made by the company’s executive which sent share prices plummeting.
Sales jumped 9 per cent to A$38.4 billion for the second fiscal quarter (ended July 29), which met Wall Street estimates. Commercial PC sales bucked the 13 per cent global drop to grow 15 per cent, to A$17.6 billion, while consumer sales dropped 9 per cent to A$4.8 billion.
Elsewhere, Dell’s Infrastructure Solutions Group was up 12 per cent to A$13.8 billion, server and networking sales climbed 16 per cent to A$7.57 billion, while storage revenue was up 6 per cent to $6.1 billion.
Solid results, all around, but it was pessimism surrounding the near future that investors paid attention to.
Shares are down 13.5 per cent to US$41.43, the biggest one-day fall since Dell returned as a public company in December 2018.
This comes after Chief Financial Officer Tom Sweet told investors revenue in the current quarter will be A$34.64 – A$36.4 billion, an 8 per cent fall from the same quarter a year prior, and well under the Wall Street prediction of A$38.42 billion.
Sweet pointed out Dell’s gross margins decreased 2 percentage points from a year ago to 21.4 per cent, “mainly due to expense increases and currency value changes that haven’t yet been factored into product prices.”
Co-COO Chuck Whitten said the company “observed more cautious customer behavior as the quarter progressed”, while fellow co-COO Jeff Clarke said the company is operating “in an increasingly challenging environment.”
