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Dell Reports Fiscal Year 2014 Second Quarter Financial Results

Dell today announced fiscal 2014 second quarter results, with revenue of $14.5 billion, GAAP earnings of $0.12 per share and non-GAAP earnings of $0.25 per share. The company’s Enterprise Solutions, Services and Software (ES&S) revenue was $5.8 billion, growing 9 percent year over year, including the benefit of the Quest acquisition. In End User Computing, revenue was down 5 percent year over year.

“In a challenging environment, we remain committed to our strategy and our customers, and we’re encouraged by increasing customer interest in our end-to-end solutions offerings and continued growth in our Enterprise Solutions, Services and Software businesses,” said Brian Gladden, Dell chief financial officer.

Results

  • Revenue in the quarter was $14.5 billion, flat from the previous year.
  • GAAP operating income for the quarter was $272 million, or 1.9 percent of revenue. Non-GAAP operating income was $602 million, or 4.1 percent of revenue.
  • GAAP earnings per share was 12 cents, down 71 percent from the previous year; non-GAAP earnings per share was 25 cents, down 50 percent.
  • Cash flow from operations in the quarter was $1.7 billion. Dell ended the quarter with $13.9 billion in cash and investments.

Fiscal-Year 2014 Second Quarter Results

    Second Quarter
(in millions) FY14     FY13     Change
Revenue $ 14,514     $ 14,483     0 %
 
Operating Income (GAAP) $ 272 $ 901 (70 )%
Net Income (GAAP) $ 204 $ 732 (72 )%
EPS (GAAP) $ 0.12 $ 0.42 (71 )%
 
Operating Income (non-GAAP) $ 602 $ 1,123 (46 )%
Net Income (non-GAAP) $ 433 $ 875 (51 )%
EPS (non-GAAP) $ 0.25 $ 0.50 (50 )%
 

Information about Dell’s use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. Non-GAAP financial information excludes amortization of purchased intangibles, severance and facility actions, acquisition-related charges, costs incurred in Fiscal 2014 related to Dell’s proposed merger, and other items. All comparisons in this press release are year over year unless otherwise noted.

Operating Segments Summary:

  • Enterprise Solutions Group revenue was $3.3 billion, an 8 percent increase. Operating income for the quarter was $137 million, a 9 percent decrease. Dell server, networking and peripherals revenue increased 10 percent, the fifth consecutive quarter of growth for this business, driven by continued strength in hyper-scale data center servers. Dell networking continued to grow, with a 19 percent revenue increase. Dell storage revenue declined 7 percent.
  • Dell Services revenue was $2.1 billion, up 2 percent, driven by a 3 percent increase in support and deployment revenue and a 5 percent increase for infrastructure, cloud and security services revenue. Applications and business process services revenue declined 6 percent. Total Services operating income was $339 million, a 1 percent increase.
  • Dell Software revenue was $310 million, and recorded an operating loss. The company is continuing to enhance its software capabilities with investments in this business that increase R&D and sales capacity.
  • End User Computing revenue was $9.1 billion in the quarter, a 5 percent decrease. Operating income for the quarter was $205 million, a 71 percent decrease. Dell desktop and thin client revenue increased 1 percent, mobility revenue declined 10 percent, and revenue from software from third parties and peripherals declined 5 percent. Dell was the only vendor among the top five worldwide to increase PC unit-shipment share both year over year and sequentially in the past two calendar quarters, according to IDC.

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.

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