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Earnings alert: Dell beats big, Zscaler stock moves higher, Workday stock drops

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Yahoo Finance Live anchors discuss quarterly earnings for Dell, Zscaler, and Workday.

Video Transcript

JARED BLIKRE: Welcome back. Let's take another look at some movers. Shares of Dell up about 12%, and that's after the company reported strong results for the first quarter, driven by strong demand in enterprise, computing, software, and healthy sales of PCs. And Julie, I just want to talk about Michael Dell because he's a happy guy this week. He's getting a nice price for his VMware shares. You know, he owns 40% of the company. But also Dell, not a bad showing here, up 12%.

JULIE HYMAN: Yeah, not a bad showing. And I haven't looked lately at how much of Dell he still owns, his namesake company here. So I'm going to call that up real quick. It looks like he owns about 2% still of Dell as well. So sitting pretty on two fronts here this week. So sales up 16% in the quarter for Dell to just over $26 billion. $25 billion is what analysts had been projecting. And the company saw strong demand in particular for commercial PCs. That was up by 22%. It's a high grossing product for Dell. And obviously, the margins decent on that one, too.

So what's interesting about this to me is, we're hearing a lot of companies talk about belt tightening, talking about slowing down and hiring, trying to cut expenses. But at least, it looks like, in the PC cycle for now, that hasn't been happening as much on the commercial front. What's also interesting about that is, if we're talking about pull back from the office, you would think there wouldn't need as many computers. On the flip side, if you, like me, had your laptop at home for a few years, and it became outdated, then at some point, the company is going to update that laptop. So maybe there are some of that happening as well.

JARED BLIKRE: Well, along those lines, I buy a new PC about once every two to three years. And so, I bought this. I happen to buy this huge HP laptop right before the pandemic. And it kind of came in handy. And two years later, so recently, I bought a PC. It's something that just sits in my living room. And it's very powerful, and I love it. So I think there are reasons, using my anecdotal results of me, that people are going out and still buying stuff.

You know, I think people tightening their belts-- there is an inflation. I don't know if you're going to get substitution effects here, but I guess, maybe people are-- they're using their cars for 12 years now. Pras Subramanian has been-- maybe people are just going to stick with the computer a little bit longer, even as it slows. But I think people are mobile now, so much that as long as they have the nice new phone, the new iPhone, or maybe a year old, they don't need that much PC power.

JULIE HYMAN: Maybe not, but the companies, I guess, their employers still do. Let's talk about some other tech movers that we're watching. Zscaler is another company out with its numbers, security software in this case. Those shares are also up 9.6%. Its results beat estimates. It also raised its forecast. And basically, they're seeing broad-based demand, despite what is happening on the macro front here.

Piper Sandler writing in a note to investors that billings decelerated, which was expected, but they didn't decelerate as much as analysts had been projecting. And there were solid trends. Here's another thing that echoes what we heard from Dell-- solid trends along-- across large enterprise customers and federal and overall demand. So that's interesting here, again, this idea--

JARED BLIKRE: Federal.

JULIE HYMAN: I mean--

JARED BLIKRE: Welll, that's government money.

JULIE HYMAN: If you do think about the big tech companies that have disappointed, most of them have been consumer-facing, not enterprise-facing, although there are certainly-- like Snowflake, there have been some notable disappointments on the enterprise front as well.

JARED BLIKRE: Yeah, well, I mean, that's what-- Brian Sozzi was interviewing Chuck Robbins yesterday, CEO of Cisco. And he made the distinction, we're business to business. We're B2B. We don't have the same issues that other companies do that are consumer-facing. I just want to show the YFi Interactive here. I have our software heat map up for the day. Zscaler is up in the upper left, and we'll take a look at year to date chart, down 51%. And this was a high flyer during the pandemic, lots of excitement about the cloud. And a lot of the shine has come off there.

You take a smaller company like Nutanix. I don't know if they're on here, but they actually-- I mean, they just had a disaster earnings this week. So some of the smaller players here may be coming back a little bit. Let me show you the five-day look. I've seen some software and chip excitement this week, a little bit of money flowing in there. VMware the biggest gainer because of the takeover we were talking about. Zoom up 18%. So maybe the beginning of a comeback here.

JULIE HYMAN: Maybe.

JARED BLIKRE: Maybe.

JULIE HYMAN: But there's one that's not coming back today also. That's Workday--

JARED BLIKRE: Ooh.

JULIE HYMAN: --which you have on there. That company disappointed. So obviously the enterprise story is not clear sort of across the board because Workday is an enterprise software maker as well. That company's numbers missed estimates. First quarter earnings, $0.83, missing by two pennies a share. Revenue rose 22%. That was in line with estimates. And subscription revenue, which is really the most important source for Workday, was up by 23% here. So that disappointing investors, and those shares are down about 7% here. So it's not-- there is definitely not sort of a monolithic story here, no matter where you look.

JARED BLIKRE: The waters are murky on every single front. The waters are murky. There you go. Glad we solved that.

JULIE HYMAN: There you go.