Dell’s Global Commercial Strength Drives Second Quarter Financial Results

Overall company revenue up 22 percent to $15.5 billion; Commercial business revenue increases 28 percent to $12.7 billion; Servers, storage and services revenue up 43 percent to $4.3 billion

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Round Rock, Texas, August 19, 2010 – Commercial customer demand for Dell enterprise solutions – including servers and networking systems, storage and services – increased significantly worldwide in the second quarter of fiscal 2011, driving a 22-percent improvement in total revenue to $15.5 billion, and an 11-percent gain in operating income to $745 million on a GAAP basis in year-over-year comparisons


Fiscal-Year 2011 Second Quarter Highlights

  • Total revenue in the quarter ended July 30 was $15.5 billion, a 22-percent increase from a year ago.
  • Dell’s commercial business continues to benefit from improved demand across all products and services, and in all geographies as Dell expands its enterprise solutions portfolio. Recently, Dell acquired Scalent, developer of virtual infrastructure management technology, and Ocarina Networks, a leading developer of storage optimization technology. The company also announced an agreement to acquire 3PAR, the leading global provider of utility storage for cloud computing. These moves illustrate Dell’s commitment to build its capabilities for open and affordable enterprise solutions.
  • Dell’s business in emerging countries continued to grow rapidly, with total revenue from Brazil, Russia, India and China (BRIC) up 52 percent to account for 12 percent of Dell’s overall revenue.


  • GAAP operating income was $745 million, or 4.8 percent of revenue. Non-GAAP operating income was $872 million, or 5.6 percent of revenue.
  • Cash flow from operations was $1.3 billion, with Dell ending the quarter with $13.1 billion in cash and investments.

Strategic Progress

  • Server and networking revenues increased 35 percent with rapid growth in blades.
  • Storage revenue improved 13 percent led by EqualLogic storage products, which grew 63 percent as it gains wider adoption among customers.
  • Services revenue increased 57 percent to $1.9 billion with the inclusion of Perot Systems.
  • Dell introduced new Business-Ready Configurations of servers, storage, networking and virtualization technologies to help customers more quickly deploy open, affordable, fully-integrated, virtualization-ready data center solutions.
  • The corporate refresh cycle is continuing and led strong growth in Dell’s commercial client business. Revenue in total mobility and desktop products grew 21 and 17 percent, respectively, driven by particular strength in large enterprise and small and medium businesses. In the quarter, Dell announced new Latitude E-Family laptops and features, and a portfolio of Flexible Computing solutions and services to extend the reach of virtual desktops.

Business Units and Regions

  • Large Enterprise revenue was $4.5 billion, up 38 percent, with revenues for servers, services and mobility all improving by more than 50 percent. Operating income for the quarter was $288 million, a 68-percent improvement.
  • Public revenue was $4.6 billion, an increase of 21 percent. Operating income for the quarter was $369 million, a 4-percent decline. Revenue from services, which includes Perot Systems, again more than doubled in the quarter from a year ago. Server and networking revenue increased by 12 percent. Sales to healthcare customers were strong while state and local government revenue was relatively flat.
  • Small and Medium Business revenue was $3.5 billion, up 25 percent. Operating income was $323 million, a 32-percent increas e. Revenue for SMB server and networking increased 28 percent; for storage, increased 22 percent; for desktop PCs, increased 29 percent, and for mobility, increased 32 percent.
  • Consumer revenue was flat at $2.9 billion. Operating income was a $21 million loss. The company remains confident that initiatives underway will improve operating margins for the segment. Asia-Pacific and Japan revenue grew 38 percent and the Americas and EMEA were up 17 and 24 percent, respectively. Revenue in the quarter from outside the U.S. was 47 percent of the company’s total.

Michael Dell, chairman of the board and chief executive officer: “We continue to strengthen our portfolio of data center solutions at an aggressive pace with the addition of key IP, talent and technology. This quarter’s results are a strong reflection of the progress we’ve made, and we remain very focused on delivering the best possible solutions and services to meet our customers’ IT needs.”

Brian Gladden, chief financial officer: “We are positioned well to continue benefiting from the global corporate refresh underway in client and enterprise systems. This was a solid quarter highlighted by increasing revenues, operating income and cash flow. We continue to focus on improving operating income and executing on our long-term value-creation framework, while making key investments in solutions and resources.”

Company Outlook
Dell believes the corporate client refresh is well underway and that demand will continue through the next several quarters. For the third quarter, the company expects seasonal improvements from federal government sales and commercial businesses, resulting in a pick-up in the low single digits. Dell reiterated its outlook provided in June, anticipating revenue growth for the year from 14 to 19 percent and non-GAAP operating income growth between 18 to 23 percent.