Dell Technologies Inc cut its full-year revenue forecast on Tuesday as its PC business is hit by a shortage of chips from Intel.
“Intel CPU shortages have worsened qtr-over-qtr, impacting our commercial PC and premium consumer PC Q4 forecasted shipments,” Chief Operating Officer Jeffrey Clarke said on a call with analysts.
Intel has publically said that demand for its processors used in PCs was outstripping its ability to add capacity, prompting it to rely on contract manufacturers to ease shortage.
Dell’s PC business had a strong quarter, with sales rising 4.6% to $11.41 billion and mirroring upbeat results from rival HP, which also reported earnings on Tuesday.
Revenue from Dell’s server and networking unit, however, dropped 16% to $4.24 billion in the third quarter ended Nov. 1, while sales in its VMware unit rose 11.4%.
The PC maker said excluding China, its server business was down mid- to high-single digits in the quarter and that demand for servers will “remain challenged”.
"This quarter's results were driven by the strength of our diverse model, with our storage, commercial client and VMware businesses performing very well," said Tom Sweet, chief financial officer, Dell Technologies. "We remain focused on long-term profitable growth, growing faster than competitors and the industry, growing operating income and EPS faster than revenue and generating strong cash flow over time."
The company cut its fiscal 2020 revenue forecast to between $91.5 billion and $92.2 billion from between $92.7 billion and $94.2 billion.
Dell reported total revenue of $22.84 billion for the latest quarter.
The company’s net income was $552 million, compared with a loss of $895 million a year earlier.
Excluding items, the company earned $1.75 per share.