Dell Inc and Hewlett-Packard Co dismissed worries about weakening technology demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.
Both faced questions on Thursday about the strength of the recovery in spending on technology, after Cisco Systems Inc chief executive John Chambers warned last week about “unusual uncertainty” in the global economy.
Analysts said fears persisted about the strength of any recovery in consumer spending, as growth slows in Europe and China as well as in the US.
Despite dismissing such fears, shares in Dell fell 3 percent after it posted slightly weaker-than-expected growth margins and HP fell about 1 percent.
“We saw better-than-normal quarterly seasonality, as well as good balanced performance across all of our three regions,” HP’s interim chief executive Cathie Lesjak said, during a conference call with the media.
Lesjak also fielded queries on a successor for former chief executive Mark Hurd — who resigned two weeks ago over expense account inaccuracies linked to a female marketing contractor.HP named an executive headhunting firm on Wednesday to lead the search for a new boss. The company will consider both internal and external candidates.
Lesjak said HP is “looking forward, not back” and reiterated that shareholders are behind the company. She also said that HP was not looking for major change.
“When you have a winning strategy, I don’t see the motivation to change it,” she said.
HP is a dominant presence in a number of technology markets, from PCs and printers to services and servers and is a bellwether for spending in the sector. Its results on Thursday pointed to solid — if unremarkable — growth.
HP had reported preliminary results back on Aug. 6, so Thursday’s numbers had not been expected to move its stock, which has fallen 12 percent since Hurd resigned.
HP said earnings rose 6 percent as expected, helped by strength in servers and personal computers.
Storage and server revenue rose 19 percent, while PC revenue rose 17 percent and sales in the printing group climbed 5 percent. Lesjak did not point to any particular weakness in the market, other than in consumer notebooks.
Dell chief financial officer Brian Gladden said the corporate cycle was proceeding as forecast, adding that he expected component costs to start to come down in the fiscal third and fourth quarters.
Dell beat Wall Street’s profit and revenue estimates and said it expected a pick-up in demand for PCs from corporate customers, but the company’s gross profit margin lagged expectations and its shares fell in after-hours trading.
Dell said it expected demand for PCs among corporate customers to continue for the “next several” quarters and “seasonal improvements” in the third quarter, from sales to the federal government and business customers, with a resulting “pick-up in the low single digits.”
“This is a pretty stretched-out cycle and we think it’ll continue for several quarters,” Gladden said.
For the fiscal second quarter, “commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43 percent,” he said.
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