Dell misses revenue estimates on weakness in server business

Technology

FILE PHOTO: A Dell gaming computer is shown at the E3 2017 Electronic Entertainment Expo in Los Angeles, California, U.S. June 13, 2017. REUTERS/ Mike Blake

(Reuters) – Dell Technologies Inc (DELL.N) missed Wall Street estimates for quarterly revenue on Tuesday as its server business wrestled with higher costs and lower demand in a market hit by U.S.-China trade tensions.

Revenue from its server and networking unit dropped 16.1% to $4.24 billion in the third quarter ended Nov. 1, overshadowing a 11.4% rise in sales in its software maker VMware (VMW.N) unit.

U.S. technology companies with a sizeable exposure to China are bearing the brunt of the 16-month long trade war, which has rattled global supply chains and manufacturing, fanning fears of an economic slowdown.

Earlier this month, Cisco Systems Inc (CSCO.O) forecast quarterly revenue and profit below estimates, citing trade uncertainties.

Dell had previously warned that softness in the server market would continue in the second half, as companies cut back on orders.

Client Solutions Group, which includes desktop PCs, notebooks and tablets, reported a 4.6% rise in revenue to $11.41 billion.

The Texas-based company reported total revenue of $22.84 billion for the latest quarter, narrowly missing estimates of $23.04 billion, according to IBES data from Refinitiv.

The company’s net income was $552 million, compared with a loss of $895 million a year earlier.

Excluding items, the company earned $1.75 per share, while analysts were expecting a profit of $1.62 per share.

Reporting by Neha Malara in Bengaluru; Editing by Anil D’Silva

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