This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Icahn and Dell Both Gain From Dell Earnings

This story has been updated with analyst comments.

NEW YORK ( TheStreet) -- Dell (DELL - Get Report) shares dipped incrementally to $13.40 in afterhours trading after the PC-maker missed on the bottom line but beat Wall Street's first-quarter revenue forecast. During the period, the company's Enterprise Solutions group booked a solid increase in revenue, while hardware sales were dismal, giving both sides of the Dell battle an edge.

"You can see Dell gradually transition from a PC-maker, which has very little differentiation, into a solutions provider, if they can continue to ramp up operating margin," said Carr Lanphier, an analyst at Morningstar in Chicago. "The lion's share of the value is in the Enterprise Solutions group."

The Enterprise Solutions group's successful first quarter threw weight behind activist investor Carl Icahn's bid to overtake Silver Lake Partners and founder Michael Dell's $13.65 a share offer to take the company private. The numbers highlighted his argument that Dell's bid sharply undervalued the company's potential to become a serious enterprise computing rival to IBM (IBM) and Hewlett-Packard (HPQ).

On the other hand, the dismal performance in hardware sales during the quarter gave credence to Dell's argument that a turnaround cannot occur under the harsh light of the public eye, where calls for spinoffs have grown louder.

The impact of Dell's first quarter results on each side's argument can be described as "mixed", said Lanphier.

Dell reported first-quarter revenue of $14.1 billion, a 2% decrease from the prior year, but a beat on consensus expectations of $13.5 billion in revenue, according to Thomson Reuters.

Adjusted earnings tumbled 51% to 21 cents a share, falling short of the average analyst estimate of 35 cents a share.

During the quarter, the company's End User Computing revenue suffered a 9% decrease to $8.9 billion as the segment's operating income for the quarter declined 65% to $224 million.

On a more positive note, Dell's Enterprise Solutions revenue booked a 10% increase to $3.1 billion. Operating income in the segment increased 71% to $136 million.

The company's Services revenue grew 2% to $2.1 billion.

Given the company's Feb. 5 announcement of a merger agreement to take Dell private, the firm is not providing an outlook for its fiscal 2014 second quarter.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DELL $0.00 0.00%
AAPL $132.54 0.00%
FB $80.54 0.00%
GOOG $540.11 0.00%
TSLA $247.73 0.00%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs