Shares of Dell Technologies Inc. DELL tumbled in pre-market trading despite the company reporting first-quarter revenues that exceeded Wall Street expectations.
What Happened: At the time of writing, Dell was trading at $142.25 after it experienced a significant 16.3% drop in pre-market trading on Friday as per Benzinga Pro. This followed its first quarter financial results announcement after Thursday’s market close.
Although Dell surpassed revenue expectations with a 6% increase year-over-year, reaching $22.24 billion, the company’s stock still faced a sharp decline in the after-market and pre-market. This revenue figure exceeded the consensus estimate of $21.67 billion.
The company’s Infrastructure Solutions Group was a strong performer, with revenue up 22% year-over-year to $9.2 billion. However, the Client Solutions Group’s revenue remained steady at $12 billion, showing no growth from the previous year.
Dell also reported adjusted earnings of $1.27 per share, marginally beating analyst predictions by a cent. Despite these positive results, the absence of forward guidance in the earnings release may have contributed to investor uncertainty.
In the first quarter, Dell returned $1.1 billion to its shareholders through dividends and share repurchases. The company concluded the quarter with a robust $7.3 billion in cash and investments.
Why It Matters: The sharp decline in Dell‘s stock price comes amid broader market trends and specific strategic moves by the company. Recently, Nvidia’s CEO Jensen Huang highlighted the importance of their partnership with Dell, emphasizing the role it plays in expanding AI adoption. This partnership was seen as a positive step towards innovation and growth.
Meanwhile, Dell noted it returned $1.1 billion to shareholders through share repurchases and dividends in the first quarter. The company ended the quarter with $7.3 billion in cash and investments.
Jeff Clarke, vice chairman and chief operating officer of Dell Technologies, said "No company is better positioned than Dell to bring AI to the enterprise."
"Servers and networking hit record revenue in Q1, with our AI-optimized server orders increasing sequentially to $2.6 billion, shipments up more than 100% to $1.7 billion, and backlog growing more than 30% to $3.8 billion."
The company did not provide forward guidance in its earnings release.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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