Dell COO Foresees Freight Crunch When Planes 'Get Filled Up With Vaccines'
PC component shortages continued to dog HP and Dell in their October quarters as the supply chain buckled under the weight of heavy consumer demand for telework and remote-learning connectivity tools, the vendors reported on their Tuesday evening investor calls. IDC ranked HP and Dell second and third behind Lenovo in calendar Q3 global PC share.
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HP exited its Q4 Oct. 31 with an “elevated backlog” of unfilled orders and continues “to operate with component supply shortages, which are expected to constrain our growth through the first half of 2021,” said CEO Enrique Lores. “The PC is more essential to daily life than ever before, and demand for our innovation remains strong.” A new line of HP monitors was designed “to improve a work-from-home experience, including always-on low blue light to reduce eye strain,” he said. “We expect to see continued PC unit growth in 2021.”
The company benefited in Q4 from “solid demand related to working and learning from home,” with revenue of $10.4 billion, unchanged from the year-earlier quarter, said Marie Myers, chief transformation officer and acting chief financial officer. “Our top line remained constrained due to industrywide supply shortages” in CPUs and laptop LCD panels, she said. Consumer revenue rose 24%, and commercial sales fell 12%, she said. Laptop revenue jumped 18%, but desktops declined 28%, she said: “The change in mix reflected the strong demand for notebooks, mainly in Chromebooks, which represented 20% of our total personal systems units.”
HP experienced supply chain disruptions earlier in the pandemic, “and we've been doing some replenishment of our stock at channel partners in Q4 to help meet some of that demand,” said Myers. “We do expect to see that in Q1 as well.” Component supplies “are below ideally where we'd like to be,” she said.
The industry is “still far” from the goal of satisfying everyone who needs or wants “access to a PC,” said Lopes. “We are confident that the demand for PCs is going to remain very strong during the next quarter.” HP's backlog was a record for the company, he said.
Dell’s consumer revenue rose 14% in Q3, ended Oct. 30, said CFO Tom Sweet. He cited notebook and gaming system growth: “Premium consumer products XPS and Alienware combined saw strong double-digit revenue growth for both notebooks and desktops.” The franchises combined gained 43%, said Chief Operating Officer Jeff Clarke.
Orders through Dell’s consumer-direct online business soared 62%, “as we seized the opportunity that we believe is a long-term multi-year trend towards e-commerce,” said Clarke. “Our wide range of PCs, including Chromebooks, is providing students everywhere with the essential learning tools they need. The pandemic has expanded consumers’ use of online purchasing, which is a big area of focus for us.”
Component costs amid parts shortages have been “inflationary for most of the year,” said Sweet. Laptop LCD screens are in especially short supply, as are “the components that go into the LCDs,” including display driver chips, said Clarke. That's “driving up the cost of LCDs." Clarke foresees challenges “in the freight network towards the very end of the year as airplanes get filled up with vaccines and are all competing for a limited amount of space,” he said.