reported second-quarter 2014 non-GAAP earnings of 25 cents per
share, which slivered past the Zacks Consensus Estimate by a
penny. On a year-over-year basis, earnings slumped from 50
Although revenues of $14.5 billion for the quarter remained
flat on a year-over-year basis, it beat the Zacks Consensus
Estimate of $14.1 billion. Sequentially, revenues increased 3%.
The company reported year-over-year decline in product revenues
(down 1%), which was offset by a 4% increase in the services
On the basis of operating segments, Dell's Enterprise
Solutions Group revenues increased 8% to $3.3 billion, primarily
boosted by the 10% increase in its server and networking revenues
and a 19.0% increase in Dell networking revenues. These increases
more than offset the 7% decrease in Dell's storage revenues.
Dell Services witnessed a revenue growth of 2.0% and reached
$2.1 billion, primarily boosted by a 3.0% increase in Support and
Deployment revenues and 5% revenue jump from infrastructure,
cloud and security services, which more than offset the 6.0%
decrease in revenues from Applications and Business Process
Dell Software generated revenues of $310.0 million. The End
User Computing segment revenues were $9.1 billion, declining 5.0%
on a year-over-year basis, primarily due to a 5.0% revenue
decline in peripherals and third-party software revenues and 10%
decline in mobility segment revenues. However, Dell desktop and
thin client revenues were up a marginal 1%.
Dell's non-GAAP gross profit was down 13.0% from the year-ago
quarter to $2.84 billion and margins contracted 300 basis points
(bps) to 19.6% on a year-over-year basis, primarily due to tepid
Non-GAAP operating expenses were up 4% from the year-ago
quarter to $2.24 billion. As a percentage of revenues, operating
expenses expanded 60 bps during the same period.
Increase in operating expenses negatively impacted operating
income for the quarter. Operating income (non-GAAP) decreased 46%
from the year-ago quarter to $602.0 million or 4.1% of
Dell's non-GAAP (excluding amortization of intangibles,
severance and facility consolidation cost, acquisition-related
costs) net income came in at $433.0 million or 25 cents per
share, which nearly halved from $875.0 million or 50 cents
reported in the year-ago quarter.
Balance Sheet & Cash Flow
The company exited the quarter with cash and cash equivalents
and short-term investments of $11.8 billion, up from $10.9
billion reported in the previous quarter. Dell's long-term debt
stood at $4.08 billion, down from $4.12 billion in the previous
quarter. The company reported $1.68 billion in cash from
Dell reported a tepid second quarter although it beat the
Zacks Consensus Estimate on both fronts. Margins were negatively
impacted by sluggish revenues and higher expenses. Moreover, due
to the impending decision on privatization, the company did not
provide any outlook.
Moreover, the company is up against cutthroat competition from
), 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
However, Dell is exploring other markets and business
segments. Moreover, the company is expanding its business across
different geographical regions.
Currently, Dell has a Zacks Rank #3 (Hold). Investors can
consider other stocks in the technology space such as
). Both the companies carry a Zacks Rank #1 (Strong Buy).
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