Dell Technologies (DELL-US) Affected by the appreciation of the U.S. dollar and China’s epidemic prevention and control, the second-quarter revenue was slightly lower than market expectations, and the third-quarter financial forecast was also weaker, coupled with the pessimistic view of the top management on the business environment in the second half of the year, resulting in the stock on Thursday (25th) It tumbled more than 8% after the bell.
Dell’s net profit fell 38.5% to $511 million in the second quarter ended July 29, with adjusted earnings of $1.68 a share, slightly above analysts’ estimates of $1.64. Revenue rose 9 percent to $26.43 billion, slightly missing analysts’ estimates of $26.5 billion.
Looking ahead,Chuck Whitten, Dell’s co-chief operating officer, said that entering the third quarter, he observed “customers being more cautious about spending.”Jeff Clarke, another co-chief operating officer, also said the company was facing “an environment of increasing operational challenges.”
Dell Chief Financial Officer Tom Sweet said on a conference call that revenue for the quarter is expected to be between $23.8 billion and $25 billion, with the median forecast down about 8 percent from a year earlier. Analysts’ average estimate for revenue was $26.4 billion.
The company expects full-year revenue to be flat or up 2 percent.
Dell’s stock price fell more than 8% after the market and was still down 5.09% by the time of writing. The stock earlier closed up 2.75% with the broader market at $47.90 a share, down 15% for the year.
Dell’s total cost of revenue climbed to $20.99 billion, up 12% year over year, due to the appreciation of the dollar and China’s lockdown measures in the second quarter.
The rising dollar has also eroded the profits of tech companies such as Microsoft and Apple this year, and consumers have cut spending on electronics such as personal computers (PCs) and smartphones, highlighting the challenges facing the tech industry.
Dell’s second-quarter consumer PC revenue fell 9% to $3.3 billion, echoing Intel’s (INTC-US), Lenovo (00992-HK), a sign that the pandemic boom continues to fade and consumers are more inclined to spend their money on the knife edge in the face of the highest inflation in 40 years.
However, commercial PC sales in the second quarter still rose 15% year-on-year to $12.1 billion. About 60% of Dell’s total revenue comes from the PC business.