Dell Technologies Sales Drop 10% in Q3 Fiscal 2024 Amid Industry Chip Shortage Challenges

Dell Technologies has released its fiscal third-quarter 2024 financial report, showcasing a revenue of $22.3 billion. The figures revealed a 10 percent decline year-over-year, indicative of the challenges faced by the company in the competitive tech landscape.
Dell XPSDell’s Infrastructure Solutions Group recorded a third-quarter revenue of $8.5 billion, sustaining a flat sequential performance but experiencing a 12 percent year-over-year downturn.

Notably, Dell’s Servers and Networking division witnessed a revenue of $4.7 billion, marking a 9 percent sequential growth attributed to the surge in demand for AI-optimized servers.

Conversely, Dell’s Storage revenue faced an 8 percent sequential drop, albeit demonstrating strength in unstructured data solutions and data protection, accumulating $3.8 billion. The operating income for this quarter landed at $1.1 billion.

Dell, like many other server manufacturers, grappled with supply constraints pertaining to AI chips produced by Nvidia. These chips are instrumental in powering large language models, such as those utilized in apps like ChatGPT, contributing to the industry-wide challenges.

Revenue from Dell’s Client Solutions Group, which sells Dell laptops and PCs, totaled $12.3 billion, depicting an 11 percent year-over-year decline and a 5 percent sequential downturn. Commercial client revenue accounted for $9.8 billion, while the Consumer division contributed $2.4 billion to the overall revenue. Operating income in this segment reached $925 million.

The quarter concluded with Dell maintaining remaining performance obligations of $39 billion, experiencing a 4 percent year-over-year growth in recurring revenue, reaching $5.6 billion. Additionally, deferred revenue surged to $29.1 billion, showcasing a 7 percent year-over-year increase, primarily due to escalations in software and hardware maintenance agreements.

Jeff Clarke, vice chairman and chief operating officer at Dell, expressed optimism for future revenue growth in Fiscal Year 2025, citing the positive momentum and customer interest in generative AI as driving forces.

Analyst Mikako Kitagawa from Gartner commented on Dell’s challenges within the business PC market, highlighting the significant impact on the company compared to its competitors due to market weaknesses.

In contrast, major PC chipmakers like Intel and AMD reported encouraging results, hinting at a market recovery that anticipates the much-awaited holiday season. Research firm Canalys projects a surge in demand for AI-capable PCs, estimating that by 2027, these devices will constitute approximately 60 percent of all PCs shipped.

The report underlines the intricate dynamics within the tech industry, accentuating Dell’s efforts amid supply chain constraints and market fluctuations, while the broader market anticipates an upswing driven by technological advancements like AI-capable PCs.

Related News

Latest News

Latest News