Dell’s quarterly profit drops less than feared on cost cuts

By Tiyashi Datta and Pratyush Thakur

(Reuters) -Better cost controls helped Dell Technologies (NYSE:) Inc beat estimates for first-quarter profit on Thursday, a positive sign for personal computer makers after months of cratering demand.

The results contrasted rivals HP Inc (NYSE:) and Lenovo Group (OTC:), but a full recovery remains some ways off as Dell forecast current-quarter revenue below Wall Street targets and warned that IT spending would stay cautious.

Shares of the company were down 2% after the bell, reversing gains of 5%. The stock was briefly halted during regular trading hours when the company announced results earlier than scheduled.

“We maintained pricing discipline, reduced operating expenses, and our supply chain continued to perform well after normalizing ahead of competitors,” said Chuck Whitten, co-chief operating officer of Dell.

Total operating expenses fell 6% to $3.57 billion during the first quarter.

The company’s revenue dropped 20% to $20.92 billion, but came in above analysts’ expectations of $20.27 billion, according to Refinitiv data.

Demand for desktops and laptops slumped after a pandemic-driven rush for work-from-home equipment, leading to a pile-up in inventory amid an uncertain economic outlook.

Dell’s client solutions unit – home to its consumer and enterprise PC business – posted a 23% fall in sales, while the infrastructure solutions unit, which includes servers, storage devices and networking hardware, saw an 18% decline.

Excluding items, Dell earned $1.31 per share, compared with estimates of 86 cents.

The Texas-based company expects second-quarter revenue to be between $20.2 billion and $21.2 billion, below expectations of $21.2 billion at midpoint.