(Bloomberg) – Dell Technologies Inc. and HP Inc. reported results that topped Wall Street estimates, in a sign of strong demand for personal computers from students and workers trapped at home in the coronavirus pandemic.
Quarterly revenue from Dell’s consumer devices jumped 18% to $ 3.2 billion, while HP said it shipped a record 18 million PCs in its fiscal third quarter.
“We saw strength in government and education, with orders 16% and 24%, respectively, as parents, teachers and school districts prepare for a new frontier in virtual learning,” said Jeff Clarke, Dell’s chief executive.
HP Chief Executive Officer Enrique Lores said his company’s notebooks proved essential during the pandemic. “Instead of having one pc per house, it has one pc per person,” he added in an interview.
The spread of Covid-19 has forced millions of people to stay at home. This has given the PC sector an unexpected impetus. After several years of stagnation, 72.3 million desktop computers, notebooks and workstations were shipped in the second quarter, up 11% from a year earlier, according to research firm IDC.
Read more: PC monitors in short supply as Virus Spurs buy at home
Dell’s numbers
On Thursday, Dell said sales were $ 22.7 billion in the period ending July 31. Analysts, on average, project $ 22.5 billion, according to data compiled by Bloomberg. The hardware giant reported earnings, excluding some items, of $ 1.92 per share, easily estimating $ 1.38 per share. Dell shares rose about 4% in expanded trading after the results.
Chief Executive Officer Michael Dell is once again trying to improve the structure of his technology empire, this time to generate more value from the interest of 81% of his namesake in publicly traded software manufacturer VMware Inc. Dell said in a July submission that it could look to spin out VMware. Each deal would happen at the earliest before September 2021, for a tax-free transaction, the company said.
Meanwhile, the company has struggled with the pandemic-driven recession, which has reduced companies’ demand for their data center hardware. But Dell’s efforts to refresh its PC lineup as consumers work, study and entertain at home have paid off.
Revenue from consumer devices rose 18%, while PC sales to business clients fell 11%. Server and network sales fell 5% to $ 4.2 billion. Revenue for storage hardware fell 4% to $ 4 billion. VMware revenue rose 10% to $ 2.9 billion.
Dell’s flexible call options have struck a chord with business clients who want to adopt new technology without paying for everything in advance. The company’s returning revenue came in at $ 6 billion last quarter, up 15% from a year earlier.
HP results
HP said sales reached $ 14.3 billion in the period ended July 31. Analysts, on average, project $ 13.3 billion, according to data compiled by Bloomberg. If some items were exclusive, the gain was 49 cents a share, beating the estimates of 43 cents.
The company also projected that profit in the fiscal fourth quarter will be 50 cents to 54 cents a share. Analysts searched 50 cents.
Free from a hostile takeover effort from Xerox Holdings Inc., HP’s Lores attempted to navigate the pandemic, first by solving production challenges so that the company could meet PC demand from students and workers sitting at home. With corporate offices low, HP’s commercial printing business has shrunk, but the company has used ink subscriptions to support printing revenue. That service which soon has 8 million subscribers.
Revenue from Personal Systems, mostly computers, rose 7% to $ 10.4 billion. Consumer revenue jumped 42% while business sales decreased 6%. Print revenue dropped 20% to $ 3.9 billion.
HP expects free cash flow in fiscal 2020 to total $ 2.5 billion to $ 3 billion.
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