) delivered first-quarter 2014 earnings of 21 cents per share,
way below the Zacks Consensus Estimate of 34 cents.
The company reported revenues of $14.1 billion in the reported
quarter, down 2.2% year over year. The decline in revenues can be
attributed to the lower contribution from the Product
Revenues by Segments
The company reported revenues under the following
The company generated
revenues of $3.1 billion, improving 10.0% on a year-over-year
basis. Under, this segment, Dell server and
networkingrevenuesincreased 16.0% compared to the year-ago
quarter. Apart from this, Dell networking continues to grow with
a 24.0% increase in revenues, which includes a 46.0% growth in
the company's Force10 business.
witnessed a revenue growth of 2.0% and reached $2.1 billion,
supported by an 11.0% increase in revenues from infrastructure,
cloud and security services. Within this segment, the Support and
Deployment revenues moved up 2.0%, while the Applications and
Business Process services tumbled 15.0%.
generated revenues of $295.0 million. Dell improved its software
business and generated additional sales capability and research
End User Computing
segment revenues were $8.9 billion
declining9.0% on a year-over-year basis. Within this segment, the
Dell desktop and thin-client revenues declined 2.0% on a
year-over-year basis, the mobility revenues declined 16.0%, and
peripherals and software revenues declined 6.0%.
Gross margin in the reported quarter was 19.5% down from 21.3%
in the year-ago quarter.
Operating income for the quarter was $226.0 million or 1.6% of
revenues in the reported quarter, down 73.0% year over year, hurt
by the reduction in revenues and substantial increase in
Reported earnings in the quarter were 7 cents per share
compared with 36 cents a share in the year-ago quarter. Excluding
special items like amortization of intangibles, severance and
facility consolidation cost, acquisition-related costs, as well
as income tax adjustments, earnings per share in the quarter came
in at 21 cents versus 43 cents in the year-ago quarter.
Balance Sheet & Cash Flow
The company exited the quarter with cash and cash equivalents
of $10.9 billion, down from $12.8 billion reported in the
previous quarter. The company used $39.0 million cash in
operating activity, a considerable improvement from the $138.0
million used in the year-ago quarter.
As the company is looking forward to a pending merger agreement /
leveraged buyout agreement (LBO), so the management has not
provided an outlook for the second quarter of fiscal year
Dell to Go Private
recently announced its decision to go private in an LBO. Founder
Michael Dell will acquire the company for roughly $24.4 billion,
much higher than the market expectation of $23.0 billion. Dell's
shareholders will be rewarded with $13.65 per share in cash. The
transaction is likely to be completed by the second quarter of
Dell's board is trying to finalize the deal, though some of
the shareholders are not happy about the price of the shares.
Dell reported modest disappointing first-quarter numbers with
earnings per share below the Zacks Consensus Estimate. Both
revenues and margins were affected to a considerable extent. This
decline once again proves the point that the PC companies are
facing a technological shift that made selling laptop and desktop
Moreover, the company is up against cutthroat competition, low
business growth in Europe and a restricted spending environment.
The competition faced by the company in the Small & Medium
Business (SMB) and server segments is also a concern. This is the
reason that the company has opted for privatization.
Dell has a Zacks Rank #5 (Strong Sell).
Investors can consider other stocks in the technology space
) having a Zacks Rank #1 (Strong Buy).
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