Operating Segments Summary:
As previously announced, Dell has realigned its global operating segments to its end-to-end solutions portfolio in the Enterprise Solutions Group, Dell Services, Dell Software Group, and End User Computing Group.
- Enterprise Solutions Group revenue was $3.1 billion, a 10 percent increase. Operating income for the quarter was $136 million, a 71 percent increase. Dell server and networking revenue increased 16 percent as the company gained share in the calendar first quarter. Dell networking continued to deliver strong growth, with a 24 percent revenue increase, including a 46 percent growth in the company’s Force10 business. Dell storage revenue declined 10 percent.
- Dell Services revenue grew 2 percent to $2.1 billion driven by an 11 percent increase in revenue for infrastructure, cloud and security services. Support and deployment revenue increased 2 percent and applications and business process services declined 15 percent. Operating income was $370 million, a 10 percent increase.
- Dell Software revenue was $295 million, resulting in an operating loss. Dell enhanced its software capabilities during the quarter, investing in additional sales capability and research and development. Consistent with the company’s business strategy when it acquired Quest Software, this business is on track to be accretive to earnings in the first quarter of fiscal year 2015.
- End User Computing revenue was $8.9 billion in the quarter, a 9 percent decrease. Operating income for the quarter was $224 million, a 65 percent decrease. Dell desktop and thin-client revenue declined 2 percent, mobility revenue declined 16 percent, and software from third parties and peripherals revenue declined 6 percent.
Company Outlook:
Given the company’s announcement on Feb. 5 of a definitive merger agreement to take Dell private, the company is not providing an outlook for the fiscal 2014 second quarter.
About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology and services that give them the power to do more. For more information, visit www.dell.com. As previously announced, the first-quarter analyst call with Brian Gladden, CFO, and Tom Sweet, corporate controller, will be webcast live today at 3:45 p.m. 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.
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.” Dell encourages investors to review the reconciliation 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 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: effects of our proposed
merger; 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 1, 2013. Factors or risks that could cause
our actual results to differ materially from the results we anticipate
also include: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement; (2) the inability to complete the proposed merger due to the
failure to obtain stockholder approval for the proposed merger or the
failure to satisfy other conditions to completion of the proposed
merger, including that a governmental entity may prohibit, delay or
refuse to grant approval for the consummation of the transaction;
(3) the failure to obtain the necessary financing arrangements set forth
in the debt and equity commitment letters delivered pursuant to the
merger agreement; (4) risks related to disruption of management’s
attention from the Company’s ongoing business operations due to the
transaction; and (5) the effect of the announcement of the proposed
merger on the Company’s relationships with its customers, operating
results and business generally. Dell assumes no obligation to
update its forward-looking statements.
