Dell, HP Slip on Worry Over Shortages, Muted Outlook By Investing.com

By Dhirendra Tripathi

Investing.com – Stocks of Dell (NYSE:DELL) and HP (NYSE:HPQ) traded lower in Friday’s premarket on worries over higher input costs and lengthening order backlogs due to component shortages.

HP chief executive Enrique Lores told analysts after the company’s quarterly results that it had a full quarter’s worth of order backlogs that it hadn’t been able to process yet. He added that he expected such problems to last well into 2022.

Demand for semiconductor chips that go into laptops, desktops, mobile, cameras, printers and cars has exploded in the last one year due to work-from-home becoming a way of life for many. Supplies have lagged and capacities take time to come up.

Net revenue from HP’s bread-and-butter business of personal systems was flat at $10.4 billion, with unit sales of notebooks up only 2% and desktops down 7%. That compares with IDC data showing that industry shipments of PCs rose 13% on the year in the three months through June.

The company’s printer business accounted for all the growth registered in the quarter. Net revenue in this segment jumped 24% to $4.9 billion.

HP said it expects adjusted EPS to fall by some 13% in the current quarter, from a surprisingly strong $1.00 in the second quarter. .

Dell’s second-quarter results beat estimates and the company added that it “expects to see above normal sequential revenue growth”.

Revenue at client solutions unit, which houses its hardware business, surged 27% to a record $14.3 billion as demand came from both corporates and retail consumers. The company expects this to grow by around 9% sequentially.

In its infrastructure solution group vertical, home to the company’s servers, networking, and storage business, Dell expects around 1%-4% sequential growth.

Dell’s total revenue was up 15% to $26.1 billion. Adjusted earnings per share was $2.24, up 17%, and higher than the $2.03 estimate put out by analysts. It now expects annual adjusted EPS to be between $3.69 and $3.75, up more than 50% on the year.