Dell's Sales Plunge Double Digits Amid Weak PC Demand

[Image source=Reuters Yonhap News]

US-based Dell reported third-quarter results that fell short of market expectations. This was due to continued weak demand in the global personal computer (PC) market amid a challenging macroeconomic environment.

On the 30th (local time), Dell disclosed that its third-quarter revenue was $22.25 billion (approximately 29 trillion KRW), down 10% compared to the same period last year. This figure was below the market consensus of $23 billion. Operating profit for the same period was $1.5 billion (approximately 2 trillion KRW), a 16% decrease year-over-year.

By segment, PC division revenue declined 11% to $12.28 billion. The global PC market enjoyed a boom during the COVID-19 pandemic due to remote work and online classes, but demand has since cooled, leading to slower sales. According to market research firm Gartner, global PC shipments have decreased for six consecutive quarters through the third quarter.

Revenue from server and networking-related businesses increased 9%, driven by the surge in generative artificial intelligence (AI). Dell’s PC division accounts for about 55% of its revenue, while server and networking-related sales make up around 40%. Jeff Clarke, Dell’s Chief Operating Officer (COO), stated in the earnings release, "With increased sales related to AI servers, we expect to achieve revenue growth by 2025."

Market research firm Canalys projected that AI PC adoption will accelerate starting in 2025, with AI PCs accounting for 60% of global PC shipments by 2027.

On the day of the announcement, Dell’s stock closed up 1.08% in regular trading but fell nearly 4% in after-hours trading due to disappointment over the earnings report. Despite this, Dell’s stock has surged about 70% over the past year amid expectations of structural demand growth driven by AI adoption.

Earlier, on the 21st of last month, HP, which reported its results first, announced that its third-quarter revenue (its fiscal fourth quarter) declined 14.6% year-over-year to $53.7 billion. Revenue in the PC and printer segments decreased 8% and 3%, respectively, compared to the same period last year.