Dell and HP Shares Decline Amid Revenue Slump

Dell Technologies has recently come under fire from a prominent notebook reviewer in Australia, which coincided with a significant drop in their stock prices after the company reported a sharp decline in revenues.

The company's consumer revenue saw a staggering 18% decrease to US$2 billion as it faced challenges in launching new, innovative notebook models.

Following this disappointing report, Dell's stock plummeted more than 11% in after-hours trading and has now dropped nearly 25% over the past six months.

The decrease in revenue was particularly pronounced within Dell's client solutions group, which encompasses PCs and laptops, with annual revenue falling by 1% to US$12.1 billion.

Looking ahead, Dell anticipates its fourth-quarter revenue will range between US$24 billion and US$25 billion, which falls short of the average analyst estimate of US$25.57 billion, according to LSEG data.

Analysts from Deutsche Bank attribute Dell's weaker forecast for Q4 primarily to delays in AI server sales and a slowdown in PC upgrades.

Nick Ross, a leading PC reviewer and owner of the website ‘High Performance Laptops,’ recently called for a boycott of Dell and Alienware, claiming that the companies' actions nearly caused him serious issues. His public comments initiated a discussion about the tactics used by PR companies to manage how technology writers and media outlets report on products.

The controversies surrounding Dell have intensified, particularly in light of a recent decision to pull the Alienware product line from JB Hi-Fi, which coincides with the overall stock slump.

On a broader scale, both Dell and HP are predicting lower-than-expected earnings for the upcoming quarter, mainly due to reduced demand for AI-driven notebooks that are priced at a premium.

The stock prices for both companies have dropped by an average of 12%, with HP's shares facing their most challenging period in over three years. HP's stock fell to just above US$34, marking its worst loss since March 2020 when shares dropped over 14% in a single day.

Dell, whose fourth quarter began on November 2, is expecting revenue between US$24 billion and US$25 billion with adjusted earnings of US$2.50 per share. These figures are below the projections of analysts who anticipated US$25.5 billion in revenue and US$2.65 in per-share earnings, according to FactSet.

HP, on its part, projects first-quarter earnings per share to range between 70 cents and 76 cents, compared to an average analyst expectation of 85 cents per share.

Despite these setbacks, Jeff Clarke, Dell’s COO, commented that the AI market presents a significant opportunity for growth, although he acknowledged that development in this area will not progress in a straight line due to the shifting market landscape.

HP’s personal systems segment, which encompasses most of its growth drivers, reported a net revenue increase of 9% to US$11.5 billion year-over-year.

In addition, HP’s printing segment saw net revenue rise by 1% to US$4.5 billion, while revenue in personal systems grew by 2% to US$9.6 billion in Q4 compared to the previous year.

Bernstein analysts indicated that HP’s guidance suggests a notably back-loaded year, reliant on strong margins and ongoing PC upgrades.

Morgan Stanley analysts echoed similar sentiments, observing that a modestly in-line annual guidance paired with a subpar Q1 outlook implies that 2025 may experience an aviation of back-loaded results.

Dell, HP, Revenue