Dell, HP Say Chip Shortages Will Hit PC Supplies This Year

Dell and HP reported quarterly revenue that beat Wall Street estimates on Thursday, as customers continued to shop for personal computers, even as pandemic-led restrictions eased in many parts of the world.

However, shares of Dell fell 1 percent, while those of HP dropped as much as 6 percent, after both companies warned the ongoing computer chip shortage could impact their ability to meet demand for laptops this year.

"The component supply situation remains constrained," Dell Chief Financial Officer Thomas Sweet said in post earnings call, adding that rising costs to procure these chips would hit its operating income in the current quarter by the low to mid-single digits and lead to slightly lower revenue on a sequential basis.

HP, which ranks second among global PC vendors according to IDC data, said the shortages would limit its ability to supply personal computing devices and printers at least until the end of the year.

Still, the companies, which are leaders in the personal computing industry, said they were bullish on the overall market, expecting the surge in demand for laptops needed by people working and going to school remotely to continue.

Global shipments of PCs, the industry's collective term for laptops and desktops, grew 55.2 percent during the first quarter, according to preliminary data from research firm IDC.

Dell said revenue from its client solutions group, which includes desktops, notebooks, and tablets, rose 20 percent to $13.31 billion (roughly Rs. 96,380 crores) in the reported quarter.

HP's PC-related sales rose 27 percent in the quarter ended April 30, while notebook sales surged 47 percent from the same period a year earlier.

Dell's revenue rose 12 percent to $24.49 billion (roughly Rs. 1,77,340 crores) in the first quarter, beating estimates of $23.40 billion (roughly Rs. 1,69,450 crores), according to Refinitiv IBES data, while HP posted overall revenue of $15.9 billion (roughly Rs. 1,15,167 crores) above the $15 billion (roughly Rs. 1,08,650 crores) estimate.

© Thomson Reuters 2021