Dell expects PC backlog to balloon in Q1 amid supply chain snarls

[BENGALURU] Dell Technologies said on Thursday (Feb 24) it expects PC backlog to balloon in the first quarter due to supply chain constraints and reported a quarterly profit miss, sending its shares down 7 per cent in extended trading.

A pandemic-fuelled demand for PCs helped the company draw in billions of dollars in sales over the past year. However, an ongoing global chip shortage and supply chain issues are pinching Dell as longer lead times and parts shortages have led to higher component and freight costs.

The company earned US$1.72 per share on an adjusted basis, below Wall Street's estimate of US$1.95, according to IBES data from Refinitiv.

Shares of Texas-based Dell closed down 1 per cent on Thursday. They were trading at US$51.89 in extended trading.

"We expect opex (operating expense) as a percentage of revenue to be slightly higher than FY22 as we invest in the business," finance chief Tom Sweet said.

Still, revenue surged 16 per cent to US$28 billion in the fourth quarter to beat analysts' expectations and the first-quarter forecasts for revenue and profit were above estimates.

In the 3 months to Jan 28, revenue jumped by a quarter at Dell's client solutions group - the business that includes desktop PCs, notebooks and tablets.

In November, the company completed the spin-off of its cloud computing unit VMware in which it owned an 81 per cent stake. Dell had said VMware would become a standalone public firm. REUTERS