Dell Shares Plunge Over 10% on Weak Q4 Revenue Forecast and Missed Estimates

LOCAL MARKET COMMENTARY

The Top 40 index dropped 0.39% to close at 74,710 points, while the All Share index fell 0.35% to 85,102 points, as investors awaited economic data on producer inflation, money supply, trade, and budget balances due later this week. Finance Minister Enoch Godongwana said the government cannot guarantee a higher wage offer than the 4.7% proposed to public servants last month, noting that inflation has declined since the offer was made. Additionally, the premium on government-guaranteed dollar bonds issued by South Africa's state power utility has narrowed to its lowest level since their debut in 2018.

EUROPEAN MARKET COMMENTARY

European markets ended lower on Wednesday, with French stocks hitting a three-month low as budget-related political tensions intensified. Far-right leader Marine Le Pen threatened to topple the government over proposed spending cuts and tax hikes, pushing French bond yields to their highest levels since 2012. Meanwhile, a senior Romanian official called for TikTok's suspension, citing concerns about its possible influence on the shock far-right victory in the first round of the country’s presidential election.

US MARKET COMMENTARY

Wall Street closed lower on Wednesday, led by a drop in tech stocks, as concerns grew that the Federal Reserve might delay rate cuts due to persistent inflation. October data showed solid consumer spending and strong economic growth, but progress on reducing inflation seemed to stall. Weekly jobless claims also declined, signalling continued economic resilience and keeping the possibility of a December rate cut open. US markets will be closed today due to a public holiday.

ASIA MARKET COMMENTARY

Asia-Pacific markets were mixed this morning after the Bank of Korea unexpectedly cut its benchmark interest rate by 25 basis points to 3.0%. This surprised analysts, who had expected the central bank to pause rate cuts after a similar reduction in October. Australia took a significant step toward banning social media for children under 16 as the lower house of parliament passed a bill on Wednesday. The move comes despite lobbying from tech giants Google and Meta, which urged the government to delay the legislation.

CURRENCY MARKET COMMENTARY

South Africa's rand held steady against the dollar on Wednesday as the U.S. currency weakened following a key inflation report. The data showed stalled progress in slowing U.S. inflation, despite a resilient economy, casting uncertainty over the Federal Reserve's policy plans for next year.

COMMODITY MARKET COMMENTARY

Gold prices rose on Wednesday, recovering from a recent low due to a weaker dollar, but gains were limited after stalled U.S. inflation data suggested the Federal Reserve might hesitate on future rate cuts. Meanwhile, oil prices dipped in Asian trading today following an unexpected rise in U.S. gasoline stocks, raising concerns about demand ahead of the Thanksgiving holiday.

Nampak Limited (NPK) -12.50%

Nampak is finalizing its audited annual results for the financial year ending 30 September 2024 (FY24), expecting significant improvements from FY23. As part of an asset disposal program initiated in August 2023, several assets were reclassified as held for sale or discontinued operations. For continuing operations, headline earnings per share (HEPS) are estimated at 3,100.0 to 3,500.0 cents, recovering from a headline loss of 39,004.6 cents in FY23. Earnings per share (EPS) are projected at 7,300.0 to 7,700.0 cents, compared to a loss of 64,415.9 cents last year. For total operations, HEPS is forecasted at 1,250.0 to 1,450.0 cents, with loss per share (LPS) reducing significantly by 96% to 4,300.0–4,900.0 cents from 117,295.5 cents in FY23.

Argent Industrial Limited (ART) -3.88%

For the six months ending 30 September 2024, Argent reported mixed unaudited financial results compared to the same period in 2023. Revenue declined by 3.3% to R1.26 billion, while EBITDA increased by 2.0% to R203 million, and operating profit grew by 1.7% to R175.4 million. Profit for the period rose slightly by 0.7% to R130.5 million. Total assets increased by 13.2% to R2.59 billion, and shareholders’ funds grew by 11.6% to R1.81 billion, with net asset value per share rising 13.4%. Basic and diluted earnings per share climbed by 3.4% to 231.7 cents, while headline earnings per share grew by 3.7% to 231.0 cents. A dividend of 60 cents per share was declared, up 9.1%.

Tsogo Sun Limited (TSG) +0.77%

For the six months ending 30 September 2024, Tsogo Sun reported a 4% decline in income to R5.6 billion, with operating costs reduced by 1% to R3.8 billion. Adjusted EBITDA decreased by 10% to R1.8 billion, while headline earnings dropped by 15% to R759 million. Earnings per share fell 19% to 70.0 cents, and headline earnings per share declined 15% to 73.1 cents. The interim dividend per share remained steady at 30.0 cents. Net interest-bearing debt and guarantees decreased by 11% to R7.3 billion.

Dell Technologies Inc. (DELL) -12.25%

Dell's shares dropped over 10% in extended trading after issuing a fourth-quarter revenue forecast of $24–$25 billion, below analysts' expectations of $25.57 billion. While demand for AI-optimized servers drove a 34% increase in infrastructure solutions revenue to $11.37 billion, the PC segment underperformed due to weak consumer spending and competition, generating $12.13 billion versus the $12.43 billion anticipated. Additionally, Dell's third-quarter revenue of $24.37 billion missed estimates of $24.67 billion.

Autodesk, Inc. (ADSK) -8.59%

Autodesk surpassed Wall Street’s third-quarter revenue expectations, reporting $1.57 billion compared to the forecasted $1.56 billion, and slightly raised its annual revenue and earnings outlook. Adjusted earnings per share of $2.17 also beat estimates of $2.12. However, shares dropped over 10% in extended trading as investors, influenced by strong earlier performance this year, had anticipated more robust growth.

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