By Dhirendra Tripathi
Investing.com – Dell Technologies Inc. (NYSE:DELL) stock slumped 7.3% in premarket trading Friday after citing tough market conditions due to shortage of parts.
That lack of availability of components led it to a disappointing forecast of $1.25-$1.50 in adjusted profit per share for the period ending in April, lower sequentially.
The company expects PC backlog to grow in the current quarter as chips and other key components remain in short supply. It shipped 17.2 million PCs in the fourth quarter, up 9%.
Shortage of parts has been a recurring grouse of makers of laptops, mobiles, and other gadgets for more than a year. While large players like Dell would be expected to overcome the challenges by now, it doesn’t seem to be happening.
“We expect our ISG backlog to remain elevated through at least the first half of the year as part shortages continue,” vice chairman and co-chief operating officer Jeff Clarke said in the earnings call.
The Infrastructure Solutions Group (ISG) vertical is home to the company’s servers, networking, and storage business. The business revenue grew 3% in the fourth quarter to exceed $9 billion.
Dell continues to tackle the flare-up in commodity and logistics costs with price hikes. Booming demand for its machines and price increases took its annual revenue past $101 billion, a lifetime record.
Revenue of Client Solutions Group, which houses its hardware business, surged 26% to top $17 billion as demand came from both corporates and retail consumers. The company said its PC business has gained market share in 32 of the last 36 quarters.
Fourth quarter net revenue rose 16% to $28 billion. Adjusted profit rose 2% to $1.4 billion.