Dell’s announced job cuts to ride out the demand downturn wrought by high inflation and rising interest rates.
Dell Technologies posted a smaller-than-expected fall in quarterly revenue on Thursday, as demand for servers and network equipment from large businesses helped cushion sluggish PC sales. Total revenue fell 11 percent to $25.04 billion (roughly Rs. 20,500 crore) in the fourth quarter that ended February 3, but came above a Refinitiv consensus estimate of $23.39 billion (roughly Rs. 19,200 crore) drawn from 12 analysts. Rising borrowing costs and lower consumer spending have hit Dell’s growth, as customers and businesses delay their system upgrades.
But storage and server demand has remained a bright spot, thanks to the ongoing digitization by corporates and the shift to hybrid work.
Revenue in the company’s infrastructure solutions group, which includes servers, storage devices, and networking hardware, rose 7 percent in the quarter. Meanwhile, commercial and consumer revenue, which indicates PC demand, was down 17 percent and 40 percent, respectively.
Still, the lifting of lockdowns in China, a key market as well as a dominant supplier of electronics components, is being seen as a positive for PC makers this year despite weak demand, and it will help them rein in costs amid a sobering economic outlook.
In early February, Dell said it was cutting over 6,000 jobs to reduce costs and ride out the demand downturn wrought by high inflation and rising interest rates. The company took a related charge of $367 million (nearly Rs. 3,000 crore) in the fourth quarter.
Smaller rival HP forecast current-quarter adjusted profit above estimates and maintained its full-year earnings target earlier this week. Dell’s net income from continuing operations stood at $606 million (roughly Rs. 49,650 lakhs), compared to a loss of $29 million (roughly Rs. 23,750 lakhs) a year earlier.