Despite Supply Chain Shortages, Dell, HP Commercial PC Revenues Surge

Dell Technologies and HP commercial PC growth surged in the last quarter despite ongoing supply chain shortages. HP reported that corporate PC revenues rose 25% year over year, while commercial PC sales at Dell increased 40%.

Both companies reported their respective quarterly earnings late Tuesday. Dell said it had the best fiscal third quarter in its history. Overall, revenues totaled $28.4 billion across Dell’s businesses, increasing 21% over the same period last year.

HP, which reported results for the fourth quarter of its fiscal year 2021, said revenues were $16.7 billion, a 9.3% year-over-year increase. For the full year, HP’s net revenues of $63.5 billion rose 12.1%.

While HP saw a sharp rise in commercial PC sales, printer revenues of $4.9 billion were flat. HP ranks second to market leader Lenovo in terms of global shipments as of last month, according to IDC.

During the third quarter of this year, HP share growth declined nearly 6%. At the same time, Lenovo grew share, as did Dell, which IDC said ranks third in terms of PC shipments.

Regardless of shipments, HP’s PC revenues of $11.8 billion rose 13% year over year, exceeding consensus estimates of $10.5 billion. Offsetting the 25% rise in HP commercial PC revenues was a 3% decline in consumer systems.

HP president and CEO Enrique Lores said the company’s increased emphasis on commercial systems helped lift its PC business.

HP’s Enrique Lores

“As more offices reopen, we led our shift toward Windows-based commercial products where we saw their strongest demand and highest profitability,” Lores said during Tuesday’s earnings call.

Earlier this month, Lenovo also reported strong PC sales during its fiscal year 2022 second quarter. Revenues from Lenovo’s Intelligent Devices Group (IDG) rose 21% compared with the same period a year ago. Sales of commercial PCs increased 29%, while sales to small and midsize businesses (SMBs) rose 48%.

Dell’s Surging PC Business

While HP and Lenovo saw improved PC sales, Dell continued to gain ground on both companies. Dell’s Client Solutions Group had record revenues of $16.5 billion, spiking 35%, with operating income rising 14% totaling $1.1 billion.

The 40% boost in commercial sales brought revenues to $12.3 billion, while consumer revenues of $4.3 billion increased 21%. Dell said it posted its largest gain in shipments during the quarter, and a 3-point market share increase to 17.4%.

Dell’s Jeff Clarke

“Our client business has delivered dependable and consistent growth throughout multiple cycles,” Dell vice chairman and co-COO Jeff Clarke said during Dell’s investor call Tuesday evening.

“We believe trends will remain healthy, given businesses around the world are increasingly digitizing and utilizing technology to increase productivity and drive innovation.”

Supply Chain Impact

Supply chain backlogs have impacted all companies to some extent. For example, Cisco last week reported Q2 FY22 revenues of $12.9 billion that fell short of estimates. CEO Chuck Robbins said supply chain shortages have weighed on the company’s ability to meet demand.

Anticipating supply chain shortages will last at least through the first half of 2022, HP is maintaining higher inventory levels. Lockdowns in southeast Asia are currently having the most pronounced impact on printer hardware, Lores said.

Dell is facing the same semiconductor supply chain backlogs as other companies, Clarke said. But he insisted that Dell is weathering the issue better than others.

“What’s different with our Dell Direct model [is] our ability to really understand the pure demand signals from our customers and then equally translate that quickly into our supply base into the demand plan that we go build to,” Clarke said.

“What I like about our supply chain as we’ve digitized it over the years,” he added. “We’re now able to do scenario planning and simulations. That simulation allows us to make quicker decisions. In this time and day quick decisions equal execution.”