On the first anniversary of its $67 billion acquisition of EMC Corp., Dell Technologies reported quarterly results that showed the impact of the largest tech merger in history — and its continuing costs.
Dell’s second-quarter quarterly revenue rose 48% to $19.3 billion amid strong PC shipments while non-GAAP net income from continuing operations rose 141% to $873 million. Gross margin doubled to $4.8 billion.
But the company also posted a net loss of $978 million due to non-cash expenses associated with Dell’s go-private buyout in 2012 and the acquisition of EMC.
CFO Tom Sweet said in a press release that Dell had made “great progress in bringing together our family of businesses and offering our customers and partners the most comprehensive set of solutions.”
“In the second quarter, we generated strong cash flow and made progress on our de-levering goal,” he added. “We were pleased with the growth velocity of our client, server, hyperconverged and all-flash array offerings. We have the right strategy, portfolio and investments in place to deliver long-term growth.”
The EMC deal accelerated Dell’s transition from a personal computer manufacturer to a behemoth with four major businesses — storage, servers, PCs, and infrastructure software.
“We’re innovating like a start-up with the scale and reach of a global technology powerhouse,” founder and CEO Michael Dell told USA Today, citing two benefits of the deal.
Of the four business segments, PCs was the star performer, posting a 7% increase in revenue to $9.9 billion, the highest level since the second quarter of fiscal 2015. Shipments were up 3.1% and Dell said it continues to grab market share from competitors.
Sales in the enterprise-oriented Infrastructure Solutions Group grew 7% to $7.4 billion, with server and networking revenue leading the way.
Storage revenue totaled $3.7 billion, but storage orders declined in the mid-single digits, consistent with the previous two quarters. “It’s clearly an area of the market where we’re not performing as well as we should,” said Tyler Johnson, senior vice president and treasurer of Dell Technologies.