Dell Beats Quarterly Estimates After Cost Cuts Despite 20 Percent Drop in Revenue

The results contrasted rivals HP and Lenovo Group, but a full recovery remains some ways off.

By Reuters | Updated: 2 June 2023 11:09 IST

Dell Beats Quarterly Estimates After Cost Cuts Despite 20 Percent Drop in Revenue

Dell's total operating expenses fell 6 percent during the first quarter

Highlights

Dell's client solutions unit posted a 23 percent fall in sales
Its infrastructure solutions unit saw an 18 percent decline
Excluding items, Dell earned $1.31 (roughly Rs. 108) per share

Better cost controls helped Dell Technologies beat estimates for first-quarter profit on Thursday, a positive sign for personal computer makers after months of cratering demand.

The results contrasted rivals HP and Lenovo Group, but a full recovery remains some ways off as Dell forecast current-quarter revenue below Wall Street targets and warned that IT spending would stay cautious.

Shares of the company were down 2 percent after the bell, reversing gains of 5 percent. The stock was briefly halted during regular trading hours when the company announced results earlier than scheduled.

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"We maintained pricing discipline, reduced operating expenses, and our supply chain continued to perform well after normalizing ahead of competitors," said Chuck Whitten, co-chief operating officer of Dell.

Total operating expenses fell 6 percent to $3.57 billion (roughly Rs. 28,826 crore) during the first quarter.

The company's revenue dropped 20 percent to $20.92 billion (roughly Rs. 1,72,30,339 crore) but came in above analysts' expectations of $20.27 billion (roughly Rs. 1,66,91,838 crore), according to Refinitiv data.

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Demand for desktops and laptops slumped after a pandemic-driven rush for work-from-home equipment, leading to a pile-up in inventory amid an uncertain economic outlook.

Dell's client solutions unit - home to its consumer and enterprise PC business - posted a 23 percent fall in sales, while the infrastructure solutions unit, which includes servers, storage devices, and networking hardware, saw an 18 percent decline.

Excluding items, Dell earned $1.31 (roughly Rs. 108) per share, compared with estimates of 86 cents.

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The Texas-based company expects second-quarter revenue to be between $20.2 billion (roughly Rs. 166,31,892 crore) and $21.2 billion (roughly Rs. 1,74,55,126), below expectations of $21.2 billion (roughly Rs. 1,74,55,126) at the midpoint.

© Thomson Reuters 2023

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