Dell’s enterprise heft likely to shield blow from slowing PC sales

08/24/2022

2 minutes read

2022.08.24 21:30

Dell's enterprise heft likely to shield blow from slowing PC sales

By Eva Mathews

(Reuters) – Dell Technologies (NYSE:DELL)’ focus on corporate clients is likely to shield the company from a slowdown in the personal computer market and help power upbeat quarterly earnings on Thursday, analysts and industry experts said.

Industry majors from Intel Corp (NASDAQ:INTC) to Lenovo Group (OTC:LNVGY) have predicted a slowdown in PC sales in 2022 as runaway inflation cools demand after a two-year pandemic boom.

But with nearly half of its revenue coming from enterprise sales, Dell is poised to benefit from a trend of companies upgrading their equipment for the hybrid-work era.

“There is an ongoing shift to more enterprise-driven PCs and they also command higher margins,” said CFRA analyst Angelo Zino.

GRAPHIC: Dell’s commercial sales boomed during the pandemic (https://graphics.reuters.com/DELL-RESULTS/akpezkwgbvr/chart.png)

CONTEXT

China’s Lenovo – the world’s largest maker of personal computers – earlier in August posted its slowest revenue growth in more than two years, while Samsung Electronics (OTC:SSNLF) warned chip demand from PC makers would weaken further.

But global commercial shipments of desktops, notebooks and workstations are estimated to jump 16% sequentially in the third quarter, according to research firm Canalys, after a rise of 6.4% in the previous three months.

Still, Dell could face pressure from a stronger dollar, supply-chain disruptions sparked by recent COVID-19 flare-ups in China and the Russia-Ukraine war, analysts said.

GRAPHIC: Commercial PC shipments will continue to grow (https://graphics.reuters.com/PCSHIPMENTS-RESEARCH/znvneradopl/chart.png)

FUNDAMENTALS

* Analysts expect Dell’s second-quarter revenue to rise 1.4% to $26.49 billion when it reports results on Aug. 25

* Earnings per share is estimated to be $1.64

* The stock has lost nearly 17% of its value this year, compared with a 11.3% fall in smaller rival HP Inc (NYSE:HPQ)

WALL STREET SENTIMENT

* 13 of 20 analysts rate the stock “buy” or higher, while 7 have a “hold” rating

* The median price target is $59 vs $60 three months ago

* Dell trading at $46.86 currently

QUARTER REFINITIV IBES ACTUAL BEAT, MET,

ENDING ESTIMATE MISSED

Apr. 30 2022 1.39 1.84 Beat