Dell Q4 numbers add to picture of PC woe

Vendor joins Lenovo and HP in describing a tough end to last year, as commercial and consumer demand for hardware dropped

It’s become clear over the past couple of weeks that the PC market took a hammering in the fourth quarter, and that things are going to remain tough for most of this year.

Recent results from Lenovo and HP, and market analysis of the first four weeks of the year from Context, have been added to by Q4 numbers from Dell.

The supplier delivered growth in shortage, networking and servers but it faced difficult conditions in the PC space, and saw revenues on that side of its business decline by 23% to $13.4bn.

Speaking to analysts, Chuck Whitten, co-chief operating officer at Dell Technologies, said trading conditions had worsened in the second half of the past fiscal year and that demand had weakened in Q4. “Commercial revenue fared better than Consumer, down 17% as customers delayed PC purchases in the face of macroeconomic and hiring uncertainty – it was down 40%,” he said.

“We are seeing an increase in competitive pressure and elevated industry channel inventories, but we continue to maintain pricing discipline, execute our direct attach motion and focus on our relative performance in the most profitable segments of the PC market,” added Whitten.

He said Dell was weathering the storm and focusing on doing what it could to get through the current trading conditions.

“In this challenged and uncertain environment, we’ve stuck to a playbook that has served us well across multiple cycles, staying customer-focused, driving differentiated relative performance, delivering against our innovation agenda, managing our cost position, maintaining pricing discipline, and sustaining our unique and winning culture. In short, we have focused on what we can control,” said Whitten.

Improvement mooted

A view held by some of Dell’s rivals and some analysts alike is that the PC market will start to pick up in the second half and momentum will build into 2024.

Whitten was more sober about the current situation, but did share a belief that in the mid-term things would improve because the market remained fundamentally sound.

“Underlying demand in PCs and servers remains weak, and we are seeing signs of changing customer behaviour and storage,” he said. “However, Q4 was a very good storage demand quarter. We saw lengthening sales cycles and more cautious storage spending with strength in very large customers, offset by declines in medium and small business. Given that backdrop, we expect at least the early part of FY 2024 to remain challenging. That said, our fundamental belief in both the long-term health of our markets and the advantage of our business model haven’t changed.”

Earlier this week, HP, another of the big three in the PC market, also shared first-quarter numbers for the three months ended 31 January that showed the impact of the decline in the PC market.

The supplier’s personal systems unit saw net revenue of $9.2bn, down 24% year over year. Consumer-driven sales declined by 36%, commercial dropped by 18% and total units were down 28%.

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