Dell expects PC backlog to balloon in Q1 amid supply chain snarls

A person looks at a Dell laptop for sale in a store in Manhattan, New York City, U.S., November 24, 2021. REUTERS/Andrew Kelly/File Photo

Feb 24 (Reuters) – Dell Technologies Inc (DELL.N) said on Thursday it expects PC backlog to balloon in the first quarter due to supply chain constraints and reported a quarterly profit miss, sending its shares down 7% in extended trading.

A pandemic-fueled demand for PCs helped the company draw in billions of dollars in sales over the past year. However, an ongoing global chip shortage and supply chain issues are pinching Dell as longer lead times and parts shortages have led to higher component and freight costs.

The company earned $1.72 per share on an adjusted basis, below Wall Street’s estimate of $1.95, according to IBES data from Refinitiv.

Shares of Texas-based Dell closed down 1% on Thursday. They were trading at $51.89 in extended trading.

“We expect opex (operating expense) as a percentage of revenue to be slightly higher than FY22 as we invest in the business,” finance chief Tom Sweet said.

Still, revenue surged 16% to $27.99 billion in the fourth quarter to beat analysts’ expectations and the first-quarter forecasts for revenue and profit were above estimates.

In the three months to Jan. 28, revenue jumped by a quarter at Dell’s client solutions group – the business that includes desktop PCs, notebooks and tablets.

In November, the company completed the spin-off of its cloud computing unit VMware Inc (VMW.N) in which it owned an 81% stake. Dell had said VMWare would become a standalone public firm.

Reporting by Richard Rohan Francis and Eva Mathews in Bengaluru; Editing by Aditya Soni and Shinjini Ganguli

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