Dell Expects PC Backlog to Grow in Q1 2022 Amid Supply Chain Issues

Dell Technologies said on Thursday it expects PC backlog to balloon in the first quarter due to supply chain constraints and reported a quarterly profit miss, sending its shares down 7 percent in extended trading.

A pandemic-fueled demand for PCs helped the company draw in billions of dollars in sales over the past year. However, an ongoing global chip shortage and supply chain issues are pinching Dell as longer lead times and parts shortages have led to higher component and freight costs.

The company earned $1.72 (roughly Rs. 130) per share on an adjusted basis, below Wall Street’s estimate of $1.95 (roughly Rs. 146), according to IBES data from Refinitiv. Shares of Texas-based Dell closed down 1 percent on Thursday. They were trading at $51.89 (roughly Rs. 3,900) in extended trading.

“We expect opex (operating expense) as a percentage of revenue to be slightly higher than FY22 as we invest in the business,” finance chief Tom Sweet said.

Still, revenue surged 16 percent to $27.99 billion (roughly Rs. 210553.37 crore) in the fourth quarter to beat analysts’ expectations and the first-quarter forecasts for revenue and profit were above estimates.

In the three months to January 28, revenue jumped by a quarter at Dell’s client solutions group – the business that includes desktop PCs, notebooks, and tablets.

In November, the company completed the spin-off of its cloud computing unit VMware Inc in which it owned an 81 percent stake. Dell had said VMWare would become a standalone public firm.

© Thomson Reuters 2022

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