Dell Inc. (NASDAQ:DELL) cut its full-year outlook and warned it is seeing growing signs of customers becoming more cautious amid a sluggish economy and soaring inflation.
Shares of the tech giant tumbled 8% in after-market trading on Thursday after it reported quarterly results, joining rivals in forecasting a slowdown.
The company reported earnings of US$1.68 per share in the second quarter, down 15% on a year ago, though near the high end of its estimated range of US$1.55 to US$1.70 per share.
Revenue was US$26.4bn, up 9% from a year ago and in line with its forecast of US$26.1bn to US$27.1bn, while operating income rose 25% to US$1.3bn.
Sector peers Intel Corporation (NASDAQ:INTC) and Lenovo Group have both warned of a slump in the personal computer market post a two-year boom during the pandemic, with Gartner predicting shipments will drop 9.5% this year.
The enterprise business of Dell has somewhat offset the slowdown in PC sales, but company executives are cautious about the outlook for the unit that generates nearly half of Dell's revenue.
"There's caution around future hiring, trade-offs within their IT budgets given the macroeconomic uncertainty, customers reducing the size of orders and buying for only immediate requirements," co-chief operating officer Chuck Whitten said on a post-earnings call.
The company expects to generate third quarter revenue between US$23.8bn and US$25bn, lower than the US$26.34bn analysts predicted.
The company's second-quarter revenue growth was the lowest in more than a year as a surge in the dollar and Covid-19 flare-ups in China, its second biggest market, impacted growth.
Consumer revenue dropped 9%, but commercial revenue rose 15% thanks to businesses placing orders to prepare for hybrid work.