Dell Services and Enterprises Sees Revenue Growth, PC Market Still Sliding

Consumer Electronics

Published: August 15, 2013 4:21 pm

Last Updated: August 16, 2013 6:13 am

Shares of Dell Inc. (NASDAQ: DELL) may have been caught in a serious merger tug-of-war between Michael Dell and Carl Icahn, but the PC-maker and IT services provider decided to release its earnings a week early. Dell’s revenue was $14.5 billion, flat on a year-over-year basis and versus $14.18 billion expected from Thomson Reuters. The company’s Enterprise Solutions, Software and Services revenue was up by 9% to $5.8 billion. Unfortunately, that signals further deterioration in its PC and peripheral business as this revenue segment was down by 5%.

The formal earnings results were $0.25 per share on a comparable basis, versus the Thomson Reuters consensus of $0.24 per share. On a GAAP basis, after options and other items, that was only $0.12 per share. The year-over-year numbers are atrocious on earnings: down 71% on GAAP earnings and down 50% on a non-GAAP comparable basis.

Dell calls it a challenging environment, and the growth segment is its Enterprise Solutions, Services and Software businesses. Here is where this merger gets bogged down by headlines around the PC business: quarterly cash flow from operations was $1.7 billion, but Dell ended the quarter with $13.9 billion in cash and investments, versus a $24 billion market cap.

Here is a breakdown of its operation sales:

Enterprise Solutions Group revenue was $3.3 billion, an 8% increase. Operating income for the quarter was $137 million, a 9% decrease.
Dell Services revenue was $2.1 billion, up 2%, driven by a 3% increase in support and deployment revenue and a 5% increase for infrastructure, cloud and security services revenue.
Dell Software revenue was $310 million, and recorded an operating loss.
End User Computing revenue was $9.1 billion in the quarter, a 5% decrease.

Where this gets interesting is that Dell is not offering any guidance, supposedly due to being in a merger agreement. What is interesting is that Thomson Reuters has estimates of $0.25 in earnings per share and $13.9 billion in sales for the next quarterly report. That compares to $0.39 EPS and $13.7 billion in sales from the same quarter a year earlier.

Are You Ahead, or Behind on Retirement? (sponsor)

If you’re one of the over 4 Million Americans set to retire this year, you may want to pay attention. Many people have worked their whole lives preparing to retire without ever knowing the answer to the most important question: are you ahead, or behind on your retirement goals?

Don’t make the same mistake. It’s an easy question to answer. A quick conversation with a financial advisor can help you unpack your savings, spending, and goals for your money. With SmartAsset’s free tool, you can connect with vetted financial advisors in minutes.

Why wait? Click here to get started today!