Dell & HP Stocks Fall Amid Revenue Declines

Dell Technologies has recently faced criticism from one of Australia’s leading notebook reviewers, resulting in a significant drop in their stock prices. The company reported a notable decline in revenues, particularly in the consumer segment.

In the latest financial report, Dell stated that their consumer revenue fell by 18%, amounting to approximately US$2 billion. This decline is largely attributed to challenges in launching new, innovative notebooks.

Following this disappointing news, Dell’s stock price decreased by more than 11% during after-hours trading, contributing to a total decline of 24.9% over the past six months. The firm also experienced a 1% decrease in revenue from its client solutions group, which encompasses PCs and laptops, with total revenue for this group reported at $12.1 billion year-on-year.

As they look ahead to the fourth quarter, Dell has projected revenues between $24 billion and $25 billion, which falls short of analysts' average expectation of $25.57 billion, based on LSEG data.

Deutsche Bank analysts have noted that the weak guidance for Q4 is primarily due to delays in the sales of AI servers and a slowdown in PC upgrades.

Nick Ross, a well-known PC reviewer and owner of the ‘High Performance Laptops’ website, has recently called for a boycott of Dell and its Alienware brand, claiming that the companies' practices have caused him significant issues. His public statements have ignited discussions about how PR companies often leverage tech writers and media outlets to gain favorable reviews.

The downturn in Dell’s stock and the decrease in consumer PC revenue coincide with the withdrawal of Dell’s Alienware range from JB Hi-Fi, a popular retail chain.

Both Dell and HP have reported expectations for lower earnings in the current quarter, attributed in part to decreasing demand for AI-powered notebooks, which are being priced at a premium.

On average, the stocks of both companies have dropped by 12%, marking what could be HP’s most significant loss in over three years. HP shares dipped below $34, approaching their worst day since March 2020 when they saw a decline of over 14% in one trading session.

The fourth quarter for Dell began on November 2, with the company anticipating revenue to be between $24 billion and $25 billion. This forecast suggests a potential earnings adjustment to $2.50 per share, which is lower than the $25.5 billion in projected revenue and $2.65 in earnings per share anticipated by analysts, according to FactSet.

HP, on the other hand, expects its earnings per share to be between 70 cents and 76 cents for the first quarter starting November 1, compared to the 85 cents per share predicted by analysts.

Jeff Clarke, Dell’s COO, expressed optimism about the AI market, describing it as a “robust opportunity” without signs of a slowdown. However, he acknowledged that the growth in Dell’s AI business will be inconsistent as customers navigate a shifting market.

For HP, their personal systems sector—encompassing personal computers—reported a 9% increase in net revenue, reaching US$11.5 billion year-over-year. Their printing segment saw a slight rise of 1% to $4.5 billion, while personal systems revenue grew by 2% to $9.6 billion year-on-year.

Analysts from Bernstein mentioned that HP’s forecasts indicate an unusual shift with growth focused more towards the latter part of the year. They expressed cautious optimism regarding continued strong margins in HP's IPG segment and robust cycles of PC upgrades.

Similar comments were echoed by Morgan Stanley analysts, suggesting that the outlook for the full year appears to be significantly back-weighted, implying that the 2025 fiscal year might see more pronounced growth later in the year.

Dell, HP, Stocks