Dell, HP Shake Off Slowdown Fears

Dell Inc and Hewlett-Packard dismissed worries about weakening technology demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.

Analysts said fears persisted about the strength of any recovery in consumer spending, as growth moderates in Europe and China as well as in the United States.

But executives from the two personal computer makers waved off such fears, even as shares of 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,” said Cathie Lesjak, Interim Chief Executive, HP on a conference call with the media.

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“Europe has held up well and the printing group is skewing toward commercial versus consumer, which is a positive. They also showed solid progress in networking, which is a key segment we’re watching in the battle against Cisco,” said Michael Holt, Analyst, Morningstar.

Brian Gladden , Chief Financial Officer, Dell said the corporate refresh cycle was proceeding as forecast, adding he expects 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 continued pick-up in demand for PCs from corporate customers. But the company’s gross profit margin lagged Wall Street 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. It said it expects “seasonal improvements” in the third quarter, thanks to 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 in an interview with Reuters. For the fiscal second quarter, “commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43 percent.”