Dell Targets Growth For Year Ahead (DELL)

Dell Inc. (NASDAQ: DELL) had a lackluster day ahead of earnings.  Now its fiscal year of 2011 has ended as the year-end is January 2011.  Results for the quarter were $0.53 on adjusted EPS ( a record) and $15.69 billion in revenues.  Thomson Reuters had estimates of $0.37 EPS and $15.72 billion. That revenue gain translated to a 16% increase from the previous fiscal year including the impact of acquisitions. Cash flow from operations was $1.5 billion, and Dell ended the quarter with $15 billion in cash and investments.

Revenue for enterprise solutions and services grew 7 percent to $4.6 billion in the quarter and now represents 29 percent of the company’s consolidated revenue.  Non-GAAP operating income was $1.3 billion, a 61 percent increase and 8.2 percent of revenue. Dell Services revenue grew one percent to $1.9 billion and is now a $7.7 billion operation; AND Asia-Pacific and Japan revenue grew 17 percent, EMEA increased 3 percent and the Americas were up 3 percent.

Large Enterprise revenue was $4.7 billion, up 12 percent from a year ago.; Public revenue was $4 billion, a 4 percent increase; Small and Medium Business revenue was $3.7 billion, up 12 percent to its highest level in two years; Consumer revenue was $3.3 billion, up 11 percent sequentially but, as expected, down year-over- year by 8 percent on a strong Windows 7 launch last year. Enterprise solutions and services revenue rose by 27% for the full year.

Dell’s guidance was revenue growth of 5% to 9% for the full year with non-GAAP operating income growth of 6% to 12% on continued strong execution on cash flow with cash flow from operations exceeding net income. In its first quarter of fiscal-year 2012, Dell expects normal seasonal declines in its consumer and public businesses and, as such, a slight sequential decline in revenue.  The revenue translation from a 2011 base of $61.494 billion comes to $64.57 billion to $67 billion versus $64.46 billion expected from Thomson Reuters.

Shares closed down 1.3% at $13.91 versus a 52-week range of $11.34 to $17.52; the after-hours trading indications are not yet out due to a share halt.  Consider this unfinished business.  If you believe a company’s guidance for a full year out, this is actually a slightly better outlook for the year ahead.

UPDATE AT 4:24 PM EST: Dell shares reopened for trading at 4:20 PM EST and shares are now up about 6.3% from the closing price at $14.88.

JON C. OGG