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Dell Surpasses Consensus Estimates for Q1 Results but Lowers Guidance for Q3

Dell Technologies announced its fiscal first-quarter results, surpassing consensus expectations. Despite a year-over-year decline of 20%, the company reported revenue of $20.9 billion, which exceeded the Refinitiv consensus of $20.27 billion. Earnings per share (EPS) reached $1.31, excluding items, compared to the consensus estimate of 86 cents.

Dell's client solutions unit, encompassing its PC business, generated $12 billion in revenue, marking a 23% decline year-over-year. The company highlighted that PC channel inventory has been effectively managed, leading into the next quarter.

Dell's results mirror the prevalent weak demand for personal computers (PCs). The PC market has been facing challenges for several quarters, as users increasingly rely on tablets and smartphones for various tasks. Although Dell's PC business remains the largest globally, it has encountered market share loss to competitors like Lenovo and HP.

Meanwhile, the infrastructure solutions unit, which includes servers, storage, and networking, reported revenue of $7.6 billion, down 18% year-over-year.

Dell's infrastructure solutions unit experienced slower growth. The company's server business was impacted by reduced demand from hyper-scale cloud providers, and its storage and networking divisions also observed slower growth.

For the upcoming July-Q, Dell provided guidance of $20.2 billion to $21.2 billion in revenue, indicating a decline of 3% to a modest increase of 1%, falling below the Street forecast of $21.8 billion. Looking at the full year, Dell maintains its projection of revenue decreasing by 15% with a margin of error of +/- 3%.

Dell's results indicate a challenging macroeconomic environment. The company faces headwinds stemming from sluggish PC demand, reduced demand from hyper-scale cloud providers, and increased costs. Dell is not alone in grappling with these challenges, as other technology companies like Hewlett Packard Enterprise (HPE) and International Business Machines (IBM) have also reported disappointing results in recent quarters.

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