Dell Technologies Inc (NYSE:DELL) shares fell Wednesday a day after the company cut its full-year revenue forecast due in part to a shortage of chips from Intel Corp (NASDAQ:INTC).
Shares were down 4.7% to $50.70 in New York.
The company, which reported fiscal third-quarter results after the bell Tuesday, reduced its fiscal 2020 revenue forecast to between $91.5 billion and $92.2 billion from between $92.7 billion and $94.2 billion.
Demand outstrips capacity
Intel said last month that demand for its microprocessors used in PCs was outstripping its ability to add capacity, forcing it to rely on contract manufacturers to ease the shortage.
“Intel CPU shortages have worsened qtr-over-qtr, impacting our commercial PC and premium consumer PC Q4 forecasted shipments,” Chief Operating Officer Jeffrey Clarke said on a post-earnings call with analysts, according to Reuters.
Dell’s PC business had a strong quarter which ended November 1, with sales rising 4.6% to $11.41 billion and mirroring upbeat results from rival HP, which also reported earnings on Tuesday.
But revenue from Dell’s server and networking unit dropped 16% to $4.24 billion while sales in its VMware (NYSE:VMW) unit rose 11.4%.
The Texas-based company reported total revenue of $22.84 billion for the latest quarter, narrowly missing estimates of $23.04 billion.
Dell’s net income was $552 million, compared with a loss of $895 million a year earlier.
Excluding items, the company earned $1.75 per share, while analysts were expecting a profit of $1.62 per share.
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