Dell Technologies cut its estimate for fiscal 2020 following worse than expected earnings report

Dell Technologies Inc. announced its earnings report for the latest quarter on Tuesday. Having missed the analysts’ forecast for revenue, the stock was reported to have dropped by 5% in after-hours trading on Tuesday. Earnings per share for Dell in 2019’s third quarter, however, were printed better than the expectations. The Texas-based third largest manufacturer of personal computers noted a total revenue of $22.84 billion in 2019’s Q3. Based on Refinitiv’s survey, analysts had expected total revenue of $23.04 billion for Dell. Earnings per share, on the other hand, were estimated at $1.62 per share. The technology company, however, beat the estimate by a significant margin and recorded $1.75 of earnings per share.

Dell’s Server And Networking Business Dropped By 16% In The Third Quarter

Copy link to section As per Dell spokesperson, the business had a strong quarter in terms of PC sales with a rise of 4.6% marking $11.41 billion in total. VMware sales echoed the same optimism and gained by 11.4% in the third quarter. The server and networking business, however, recorded contrary results. The drop in sales was highlighted at an impactful 16% to $4.24 billion. According to Dell, excluding China, the demand for its server and networking business remained challenged in Q3. Other noticeable figures highlighted in the report include a sharp decline in Dell’s quarterly net income to $522 million as compared to $895 million printed in the same quarter of last year. Following the worse than expected earnings report, Dell has cut its estimate for fiscal 2020. From $92.7 billion to $94.2 billion as per the previous estimate, Dell has revised its guidance to $91.5 billion to $92.2 billion in fiscal 2020.

Dell’s Performance In The Stock Market In 2019

Copy link to section In the first half of 2019, Dell remained fairly upbeat in the stock market. Having started the year at $47.12, the stock was seen exchanging hand as high as around $70 in May. The year-to-date high, however, failed to sustain for long and was almost immediately followed by a bear run that brought the prices down to $45.60 in August. Dell’s chief operating officer, Jeffrey Clarke cited the paucity of chips from the American multinational technology corporation, Intel, as part of the reason for poor performance in the third quarter. Intel has also reiterated on multiple occasions that it faces challenges in meeting the rising demand for its processors. It was also added that Intel has opted for contract manufacturers in order to align the production of chips with the global demand.