PC Makers Power Up After Dell Earnings

By Jessica Menton 

A strong earnings report from Dell Technologies Inc. is giving shares of personal-computer makers a lift Friday, easing fears of a slowdown in the technology sector amid heightened trade tensions between the U.S. and China.

Shares of Dell, the No. 3 PC maker by shipments, rallied 12% Friday after the PC maker delivered quarterly earnings that beat analysts' estimates and a record $11.75 billion in revenue in its PC division. That puts the stock on pace for its best one-day percentage gain on record based on data going back to August 2016, according to Dow Jones Market Data.

Other PC makers advanced, with shares of HP Inc. climbing 1.4%.

Analysts have been monitoring how PC makers navigate tariff issues. The simmering trade dispute between Washington and Beijing and concerns over slowing global growth have caused some PC makers and hardware sellers to tighten spending.

Shares of the world's top three PC makers -- China's Lenovo Group Ltd., HP and Dell -- have each shed at least 11% apiece in August amid trade-induced volatility. The S&P 500 has slipped 1.6% in that time span.

Although Dell is weathering some of the industry's challenges, others haven't fared as well. HP reported flat revenue in the latest quarter, as strong sales of desktop computers were offset by a weaker performance in its printing business.

Meanwhile, networking-equipment giant Cisco Systems Inc., considered a proxy for high-tech hardware demand, forecast weaker-than-expected growth this quarter on lower spending from telecommunication companies and weakness in China. Cisco shares have lost 16% so far this month.

"The report leads us to reaffirm our view that Dell is a nice house in a tough neighborhood," Simon Leopold, analyst at Raymond James, said in a research note Friday. The firm maintained its 'outperform' rating on the stock, raising its 12-month price target to $62 from $61.

But there are signs of optimism for the industry. Global PC shipments rose in the second quarter after two quarters of declines. World-wide shipments totaled 63 million units for the quarter ended in June, up 1.5% from a year earlier, according to Gartner Inc.

Write to Jessica Menton at [e-mail]

(END) Dow Jones Newswires

August 30, 2019 13:08 ET (17:08 GMT)

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