Dell Stock Slumps As Muted PC Demand Forecast Offsets Solid Q2 Earnings

Dell Technologies  (DELL)  shares slumped lower Friday after the PC and laptop maker posted stronger-than-expected second quarter earnings but cautioned that weakening business and consumer demand would clip near-term sales.

Dell earned an adjusted $1.68 per share over the three months ending in July, topping Street forecasts by around 4 cents per share, as sales climbed 9% to a record $26.43 billion, thanks in part to extended demand from companies looking to promote hybrid workspaces, which offset a 9% slide in consumer sales.

Looking into the current quarter, however, Dell echoed warnings from PC-making rival Intel  (INTC)  with a softer-than-expected revenue forecast of between $23.8 billion and $25 billion, with earnings in the region of $1.57 and $1.79 per share.

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“Since late May, our view of the demand environment through the back half of the 2023 fiscal year has changed,” vice chairman and co-COO Jeff Clarke told investors on a conference call late Thursday. “The demand environment slowed and pushed to the right over the course of the quarter, particularly in (client solutions).

“The second quarter and second half macro dynamics have become more challenging as customers are taking a more cautious view of their needs given the uncertainty,” he added. “We have responded swiftly by managing inventories down and reducing our expenditures.”

Dell shares were marked 4.3% lower in pre-market trading to indicate an opening bell price of $45.84 each, a move that would extend the stock’s year-to-date decline to around 18.4%.

Late last month, Dell Technologies’ larger rival Intel cut its full-year sales forecast, citing a pullback in demand for laptop and desktop computers.

Current quarter sales, Intel added, would likely range between $15 billion and $16 billion, again missing analysts’ forecasts. For the year, Intel clipped its revenue forecast to between $65 billion and $68 billion, as softening demand, supply chain disruption and run-away inflation continue to hammer PC demand.

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