Strategic Highlights:
- Dell Enterprise Solutions and Services revenue grew 2 percent year over year to $4.5 billion and contributed half of Dell’s gross margin. The ESS revenue grew 5 percent excluding third-party storage.
- Dell Services revenue was $2.1 billion, up 4 percent. Services backlog increased 9 percent to $15.4 billion.
- Dell-owned storage grew 24 percent to $423 million.
- Server and networking revenue grew 2 percent.
Business Units and Regions:
- Large Enterprise revenue was $4.4 billion in the quarter, a 3 percent decline. Operating income for the quarter was $402 million, or 9.1 percent of revenue.
- Public revenue was $3.5 billion, a 4 percent decrease. Operating income for the quarter was $271 million, or 7.8 percent of revenue.
- Small and Medium Business revenue grew 4 percent to $3.5 billion. Enterprise Solutions and Services revenue increased 17 percent, led by services revenue growth of 23 percent and servers and networking of 16 percent. SMB had $389 million in operating income, or 11.2 percent of revenue.
- Consumer revenue was $3 billion, a 12 percent decline. Operating income was $32 million or 1.1 percent of revenue.
- Asia-Pacific and Japan revenue was flat but China increased 9 percent. EMEA revenue was down 1 percent in the quarter. Americas was down 7 percent. Revenue in the BRIC countries increased 4 percent.
Company Outlook:
The company expects second quarter revenue to be in line with historical seasonal trends and be up 2-4 percent from first-quarter levels.
About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide innovative technology, business solutions and services they trust and value. For more information, visit www.dell.com. As previously announced, the first-quarter analyst call with Michael Dell, chairman and CEO; Brian Gladden, CFO; and, Steve Felice, Chief Commercial Officer, will be webcast live today at 4:00 CDT and archived at www.dell.com/investor. To monitor highlighted facts from the analyst call, follow on the Dell Investor Relations Twitter account at: http://twitter.com/dellshares or hashtag #DellEarnings. To communicate directly with Dell, go to www.dell.com/dellshares.
Segment Realignment:
In the first quarter of Fiscal 2013, Dell made certain segment realignments in order to conform to the way Dell internally manages segment performance. These realignments affected all of Dell's operating segments, but primarily consisted of the transfer of small office business customers from the Small and Medium Business segment to the Consumer Segment. Dell has recast prior period amounts to provide visibility and comparability. None of these changes impacts Dell's previously reported consolidated net revenue, gross margin, operating income, net income, or earnings per share.
Non-GAAP Financial Measures:
This press release includes information about non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share (collectively with non-GAAP gross margin and non-GAAP operating expenses, the “non-GAAP financial measures”), which are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. In the following tables, Dell has provided a reconciliation of each historical non-GAAP financial measure to the most directly comparable GAAP financial measure under the heading “Reconciliation of Non-GAAP Financial Measures” and has presented a detailed discussion of its reasons for including the non-GAAP financial measures and the limitations associated with those measures under the heading “Use of Non-GAAP Financial Measures.” Dell encourages investors to review the reconciliation and the non-GAAP discussion in conjunction with Dell’s presentation of these non-GAAP financial measures.
Special Note on Forward Looking Statements:
Statements in this press release that relate to future results and
events (including statements about Dell’s future financial and operating
performance, trends relating to mix shift, macroeconomic uncertainty,
organic and inorganic investments and success relating to strategic
transformation, as well as the financial guidance with respect to cash
flow from operations, net income and non-GAAP earnings per share) are
forward-looking statements and are based on Dell's current expectations.
In some cases, you can identify these statements by such forward-looking
words as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “confidence,” “may,” “plan,” “potential,” “should,” “will” and
“would,” or similar expressions. Actual results and events in future
periods may differ materially from those expressed or implied by these
forward-looking statements because of a number of risks, uncertainties
and other factors, including: intense competition; Dell’s reliance on
third-party suppliers for product components, including reliance on
several single-sourced or limited-sourced suppliers; Dell’s ability to
achieve favorable pricing from its vendors; weak global economic
conditions and instability in financial markets; Dell’s ability to
manage effectively the change involved in implementing strategic
initiatives; successful implementation of Dell’s acquisition strategy;
Dell’s cost-efficiency measures; Dell’s ability to effectively manage
periodic product and services transitions; Dell’s ability to deliver
consistent quality products and services; Dell’s ability to generate
substantial non-U.S. net revenue; Dell’s product, customer, and
geographic sales mix, and seasonal sales trends; the performance of
Dell’s sales channel partners; access to the capital markets by Dell or
its customers; weak economic conditions and additional regulation
affecting our financial services activities; counterparty default;
customer terminations of or pricing changes in services contracts, or
Dell’s failure to perform as it anticipates at the time it enters into
services contracts; loss of government contracts; Dell’s ability to
obtain licenses to intellectual property developed by others on
commercially reasonable and competitive terms; infrastructure
disruptions; cyber attacks or other data security breaches; Dell’s
ability to hedge effectively its exposure to fluctuations in foreign
currency exchange rates and interest rates; expiration of tax holidays
or favorable tax rate structures, or unfavorable outcomes in tax audits
and other compliance matters; impairment of portfolio investments;
unfavorable results of legal proceedings; Dell’s ability to attract,
retain, and motivate key personnel; Dell’s ability to maintain strong
internal controls; changing environmental and safety laws; the effect of
armed hostilities, terrorism, natural disasters, and public health
issues; and other risks and uncertainties discussed in Dell’s filings
with the Securities and Exchange Commission, including its Annual Report
on Form 10-K for its fiscal year ended February 3, 2012. In particular,
Dell’s expectations with regard to cash flow from operations, net income
and non-GAAP earnings per share for the full fiscal year ending Feb. 1,
2013 assume, among other matters, that there is no significant decline
in economic conditions generally or demand growth specifically, that
macroeconomic uncertainties do not materialize into significant economic
difficulties, no significant change in product mix patterns, and
continued geographic customer demand trends. In particular, Dell’s
expectations with regard to second quarter revenue amounts assume, among
other matters, that there is no significant decline in economic
conditions generally or demand growth specifically, that macroeconomic
uncertainties do not materialize into significant economic difficulties,
no significant change in product mix patterns, and continued geographic
customer demand trends. Dell assumes no obligation to update its
forward-looking statements.
