Dell Technologies Inc and HP Inc both computer makers warned that the on going global shortage of computer chips could have an impact on the ability of the companies to meet the demands for laptops this year even as both the companies are reported revenues for their latest ended quarter that beast estimates of the Wall Street.
The better than expected results was driven by continued shopping by consumers for personal computers even with the easing of the Covid-19 pandemic induced restrictions imposed to curb the spread of the pandemic in many markets of the world.
But the warnings of challenge to production because of the chip shortage resulted in the share price of Dell dropping by 1 per cent while that of HP dropped as much as 6 per cent.
“The component supply situation remains constrained,” Dell Chief Financial Officer Thomas Sweet said in post earnings call. In the current quarter, the operating income of the company would be hit by the increasing costs of procuring the chips that are in shortage, Sweet added and predicted that its operating income would be hit by the low to mid-single digits and would result in slightly lower revenue on a sequential basis.
The global shortage of computer making chips would hinder the ability of HP Inc to meet the demands with supply for personal computing devices and printers at least till the end of the current year, said the company which is ranked second among global PC vendors according to IDC data.
Despite this, the two companies which are global leaders in the personal computing industry were bullish on the overall market, the companies said and added that they expect the growth in demand for laptops from consumers who are working from home or for students attending school from home will continue.
According to preliminary data from research firm IDC, there was a 55.2 per cent growth in the first quarter in the shipments of PCs globally. The computer industry uses the term PCs to denote both laptops and desktops collectively.
For the reported quarter, there was a 20 per cent growth in the sake revenues for its client solutions group, which includes desktops, notebooks and tablets, at $13.31 billion, Dell said.
There was a 27 per cent rise in the sale revenues from PC related sale in the quarter ended April 30 for HP while there was a 47 per cent rise in the sale revenues of the company’s notebook compared to the same period a year ago.
In the first quarter, there was a 12 per cent rise in the revenues of Dell to $24.49 billion which comfortably beat estimates of $23.40 billion as was estimated by Refinitiv IBES data. For the same quarter, HP also beat revenue estimates of $15 billion with overall revenue of $15.9 billion.
(Adapted from LiveMint.com)