Dell Impresses After Return To Public Scrutiny

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Revenue rises 9 percent, as the PC and services giant returns to public market after six year absence

Dell Technologies has posted its first ever financial results since the firm returned to public markets after it went private six years ago.

The firm has posted mixed fourth quarter and year-end financials, but it pleased Wall Street when it topped investor estimates for its quarterly financials.

Dell had returned to the public markets in December last year, under a complex cash-and-stock deal worth nearly $24 billion. That deal allowed it to bypass the traditional initial public offering (IPO) process.

Mixed financials

On Thursday Dell revealed that revenues are on the rise, but the firm is dealing with troublesome net losses, despite growth in its server, networking and PC divisions, amid intense competition.

For the fourth quarter ending 1 February, Dell posted a net loss of $299m up from a net loss of $100 in the same year-ago quarter.

Quarterly sales however increased 9 percent to $23.8bn from $21.9bn a year earlier.

There was even better news on the full-year figures, as Dell managed to shrink its net loss for the year to $2.3bn from $2.8bn a year ago.

Full year revenues meanwhile rose 15 percent to $90.6bn from $79bn a year ago.

Digging down into the numbers, we can see that quarterly revenue in its Infrastructure Solutions Group, which includes Dell’s servers, storage and networking businesses, rose 10 percent to $9.9 billion.

Dell said this was driven by $5.3bn in servers and networking revenue, and $4.6bn in storage revenue.

Meanwhile Dell’s Client Solutions Group division which includes desktop PCs, laptops and tablets, as well as peripherals, posted quarterly revenues of $10.9bn.

This 4 percent growth was helped by a strong showing in the business segment, but consumer revenue was down.

“I am pleased with our strong fourth quarter and fiscal 2019 velocity and financial performance, including double-digit revenue growth for the year across all three business units and profitable share gains across our portfolio,” said CFO Tom Sweet.

But he warned that 2020 would not be as strong for revenue growth at the firm.

The return

These are the first financials that Dell has posted since it went private in 2013.

Dell had first mooted the idea of a return to public trading in February 2018, but officially announced in July last year that it was going to return to public markets.

Dell then met with investment banks in October to discuss its options.

Dell’s return to public trading is a remarkable move considering the fierce battle that founder and CEO Michael Dell had to take the company back into private hands in 2013.

Five years ago Michael Dell claimed that operating as a private company, would allow Dell to be flexible and take a long term strategy – something that was difficult with the constant glare of shareholders.

On top of that, Michael Dell told Dell EMC World in 2017 that being privately owned removes the potential issue of employees or customers being influenced by “activist shareholders” trying to influence the business strategy, which Dell highlighted as being a growing trend.

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Author: Tom Jowitt
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