Dell Technologies Inc fell about 5% in late trading after executives’ pessimistic remarks about the business environment for the second half of the year outweighed solid quarterly results.
Company leadership suggested a greater sales challenge ahead for the maker of personal computers, servers and information technology. Co-chief operating officer Chuck Whitten said Dell “observed more cautious customer behavior as the quarter progressed.” Whitten’s co-COO Jeff Clarke said the company is operating “in an increasingly challenging environment.”
Sales climbed 9% to $26.4 billion in the fiscal second quarter, which ended July 29, in line with estimates. Earnings, excluding some items, were $1.68 share, the Round Rock, Texas-based company said Thursday in a statement. Analysts, on average, projected $1.64, according to data compiled by Bloomberg.
Fiscal second-quarter revenue from the Infrastructure Solutions Group, which includes most of Dell’s technology services, increased 12% to $9.5 billion from a year earlier. Server and networking sales climbed 16% to $5.2 billion, while storage revenue gained 6% to $4.2 billion. Supply chain backlogs improved during the quarter for Dell, and backlog-clearing PC sales helped offset demand weakness, Clarke said. However, the backlog for its infrastructure unit, particularly for server components, remained elevated, and component cost inflation is expected in the third quarter, he said.
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