Affected by the continued sluggish demand for personal computers (PCs) by companies, Dell Technologies experienced a greater than expected decline in revenue in the third quarter.
The company stated in a statement on Thursday (November 30) that in the third quarter ending November 3, sales decreased by 10% year-on-year to $22.25 billion, lower than analysts' average expectation of $23 billion, compared to $24.7 billion in the same period last year.
Among them, the revenue of the customer solutions department, including corporate and personal computer sales, decreased by 11%, far below analysts' expectations.
The slow recovery of the PC market
Personal computer manufacturers have been severely impacted in the past 18 months due to a significant decrease in demand caused by the post pandemic economic downturn. Last week, HP, a competitor in the personal computer industry, also released similarly lukewarm results.
The company's Chief Financial Officer, Yvonne McGill, stated during a conference call that sales in the PC department will experience a "lower single digit decline" and that the PC market has not yet fully recovered.
In addition, McGill predicts that in the fourth quarter ending in January next year, the company's revenue will drop to approximately $22 billion, while analysts have an average expectation of $23.9 billion.
However, some analysts are beginning to see signs of recovery in the industry. In an October report, IDC wrote that although the global economy remains sluggish, the personal computer market has "emerged from a downturn.".
Dell's Chief Operating Officer Jeff Clarke stated in a statement that Dell expects revenue to increase in the new fiscal year starting in February next year, and analysts currently expect annual sales to increase by 3.5%.
Server demand surges
Although Dell is known for its personal computer business, the department did not perform well in this quarterly report.
Due to the surge in demand for high-performance servers used to run artificial intelligence workloads in the market, the company has attracted investor interest this year. As of Thursday's close, the stock has risen nearly 90% this year.
Earlier in November, Dell also announced a $150 million server deal with artificial intelligence startup Imbue.
Data shows that Dell's server and network business in its infrastructure solutions business generated revenue of $4.66 billion in the third quarter, while analysts had an average expectation of $4.43 billion.
Jeff Clarke stated in a statement, "Due to customers' interest in generative artificial intelligence, our server and network businesses have grown by 9% month on month."
Dell's stock price initially fell by about 3% in after hours trading on Thursday, and then recovered during a conference call, mainly due to people's enthusiasm for the potential of artificial intelligence to boost demand.
Dell's outstanding performance contrasts sharply with its competitor, HP. The latest quarterly decrease in server sales announced by the latter was greater than expected.