Global Growth in Dell’s Enterprise Solutions Contributes to Strong First Quarter Results  

Information about Dell’s use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. Non-GAAP financial information excludes costs related primarily to the amortization of purchased intangibles, severance and facility-action costs, acquisition-related charges and a provision for settlement of securities class-action litigation. All comparisons in this press release are year over year unless otherwise noted.

Results

  • GAAP gross margin was 16.9 percent of revenue. Non-GAAP gross margin was 17.6 percent of revenue.
  • GAAP operating expenses were 12.7 percent of revenue. Non-GAAP operating expenses were 12 percent of revenue, or $1.79 billion, down from 13.1 percent a year ago as Dell continues its strict discipline on costs and operational execution.
  • GAAP operating income was $619 million, or 4.2 percent of revenue. Non-GAAP operating income was $824 million, or 5.5 percent of revenue.
  • Cash flow from operations was $238 million for the quarter.
  • The company resumed its stock buyback program during the quarter; spending $200 million to repurchase stock.

Strategic Progress:

  • Virtualization, cloud computing, and heightened data storage requirements are prompting customers to use their existing investments more efficiently and make new investments in enterprise innovation that drive business value. In meeting this customer need, Dell had a 39-percent increase in server revenue in the quarter. Revenue for EqualLogic storage products grew more than 75 percent. Revenue from services, boosted by the addition of Perot Systems, increased 53 percent as Dell builds its capabilities to provide end-to-end expertise globally.
  • Business in BRIC (Brazil, Russia, India and China) countries continued to grow. Revenue for those countries increased 60 percent, led by India’s 90-percent growth and Brazil’s 81 percent. China had revenue growth of 44 percent and represents a critical growth engine for the company.
  • Mobility revenue was up 18 percent. The company introduced the Vostro 3000 series designed for small businesses that require robust mobile computing solutions featuring powerful processors, high-end graphics and built-in security. Dell also enhanced its Latitude family of commercial laptops with new Intel Core i5 and Core i7 processors and other new standards-based features.

Business Units:

  • Large Enterprise revenue was $4.2 billion, up 25 percent, led by a 61-percent increase in server revenue and a 44-percent increase in services revenue. Operating income for the quarter was $283 million, a 47-percent improvement. As Dell commercial customers were increasing their spending, they had more enterprise choices with the introduction of PowerEdge blade, rack-mount and tower servers along with enhancements to Dell Lifecycle Controller and Dell Management Console (DMC). These solutions offer customers a robust platform and management capability for virtualization, server consolidation, mission-critical business and database applications.
  • Public revenue was $3.9 billion, an increase of 22 percent. Operating income for the quarter was $298 million, a 2-percent improvement. Revenue from services, which includes Perot Systems, more than doubled from a year ago. Dell is the No. 1 healthcare information technology services provider in the world according to the latest IT services worldwide share report by Gartner, Inc.
  • Small and Medium Business revenue was $3.5 billion, up 19 percent. Operating income was $313 million, a 36 percent increase. Dell serves more than 10 million SMB customers globally and has more than 50,000 registered and certified partners in Dell’s Channel Program PartnerDirect.
  • Consumer revenue was $3.2 billion, a 16-percent increase, with operating income of $17 million. Shipments increased 20 percent. The need for on-line access anywhere anytime helped increase mobility revenue by 26 percent.

Quotes:

Michael Dell, chairman of the board and chief executive officer: “Our strategy and the significant investments we’re making to enhance our capabilities are providing more of the standards-based, flexible solutions that provide customers the highest value. These efforts are driving renewed Dell growth.”

Brian Gladden, chief financial officer: “This quarter was highlighted by good execution in an improving economic environment. We feel good about the growth across our commercial business as it approaches nearly $50 billion in revenues. We will continue to make investments in our enterprise solutions throughout the year.”

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