Dell Announces Record Results in Fiscal-Year 2011 FQ and FY
Dell’s expanding strength as an enterprise solutions provider and continued strong execution during the fiscal fourth quarter drove record results and one of the company’s most successful financial quarters ever.
- Revenue in the quarter was $15.7 billion and totaled $61.5 billion for the fiscal year, an $8.6 billion or 16 percent increase from the previous fiscal year, including the impact of acquisitions.
- The company had its highest operating income in five years. GAAP operating income was $1.1 billion, or 7.3 percent of revenue. Non-GAAP operating income was $1.3 billion, or 8.2 percent of revenue.
- GAAP earnings per share was a record 48 cents; non-GAAP EPS was 53 cents.
- GAAP gross margin in the quarter was 21 percent and 18.5 percent for the year. Non-GAAP gross margin was 21.5 percent in the quarter and 19.1 percent for the year, the result of record profitability in the enterprise solutions and services business, lower component costs and strong commercial execution.
- Cash flow from operations was $1.5 billion, and Dell ended the quarter with $15 billion in cash and investments.
Fiscal-Year 2011 Fourth Quarter and Full Year Highlights
Fourth Quarter Fiscal Year
|Operating Income (GAAP)||$1,145||$510||124%||$3,433||$2,172||58%|
|Net Income (GAAP)||$927||$334||177%||$2,635||$1,433||84%|
|Operating Income (non-GAAP)||$1,286||$798||61%||$4,149||$2,974||40%|
|Net Income (non-GAAP)||$1,018||$544||87%||$3,106||$2,054||51%|
Information about Dell’s use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. Non-GAAP financial information excludes costs related primarily to the amortization of purchased intangibles, severance and facility-action costs, a merger termination fee, certain settlement costs and acquisition-related charges. All comparisons in this press release are year over year unless otherwise noted.
- Revenue for enterprise solutions and services grew 7 percent to $4.6 billion in the quarter and now represents 29 percent of the company’s consolidated revenue. Server revenue increased 16 percent. EqualLogic sales grew 49 percent and, combined with Dell PowerVault sales, accounted for almost two-thirds of the company’s storage revenue and more than 80 percent of the company’s storage gross margin dollars. Revenue for the combined Large Enterprise, Public and SMB businesses was up 9 percent to $12.4 billion in the quarter, with revenue for commercial laptop and desktop computers growing 10 percent.
- Strong demand and profitability across all commercial business segments drove consolidated GAAP operating income of $1.1 billion, or 7.3 percent of revenue. Non-GAAP operating income was $1.3 billion, a 61 percent increase and 8.2 percent of revenue.
- Client profitability improved notably in the second half of the year driven by solid supply-chain performance, lower input costs and improved product quality. The company’s product availability improved 37 percent and order-to-delivery times improved 33 percent over the previous year. For the full year, client revenue grew 14 percent to $33.7 billion driven by a continuing corporate refresh cycle.
- Dell Services revenue grew one percent to $1.9 billion as the company delivered on its first-year revenue and cost-synergy targets associated with the successful integration of Perot Systems. The services organization now has annual revenue of $7.7 billion.
- Dell extended its core capabilities in the quarter and exited the year with a significantly enhanced enterprise solutions and services portfolio. The company is making sustained organic and inorganic investments to build its intellectual property and provide customers optimal, open and affordable solutions. Among these investments are the recently completed acquisitions of SecureWorks Inc., a provider of information-security services; Boomi, which offers a Software-as-a-Service platform to ease data exchange between cloud-based and on-premise applications; and Insite One, a leader in cloud-based medical archiving solutions.
Business Units and Regions:
- Large Enterprise revenue was $4.7 billion, up 12 percent from a year ago. Operating income was $502 million, or 10.7 percent of revenue and a 26 percent sequential increase. Enterprise solutions and services revenue was $1.9 billion, a 5 percent increase, with server revenue up 14 percent. Revenue from desktop and laptop computers grew 20 percent as the strong client refresh among large corporate accounts continued.
- Public revenue was $4 billion, a 4 percent increase driven by strong server and storage sales. Operating income for the quarter was $366 million, or 9.2 percent of revenue. For the full year, Public delivered strong performance with operating income of $1.5 billion, or 8.8 percent of revenue. Server revenue growth of 13 percent and storage growth of 12 percent balanced demand decline for desktop and laptop computers.
- Small and Medium Business revenue was $3.7 billion, up 12 percent to its highest level in two years. SMB had another quarter of record profitability, with operating income hitting $450 million in the quarter, or 12 percent of revenue. Server revenue was up 22 percent and storage revenue was up 20 percent. Revenue for desktop computers and mobile devices increased 10 percent. During the quarter, Dell added the Vostro V130 ultraportable laptop for mobile entrepreneurs.
- Consumer revenue was $3.3 billion, up 11 percent sequentially but, as expected, down year over year by 8 percent relative to a strong Windows 7 launch last year. Operating income was $69 million, or 2.1 percent of revenue. Dell introduced the Inspiron duo, which has a unique flip-hinge design to combine the simplicity of a tablet and the functionality of a laptop with full keyboard.
- Asia-Pacific and Japan revenue grew 17 percent, EMEA increased 3 percent and the Americas were up 3 percent. Revenue in Brazil, Russia, India and China (BRIC) grew 21 percent and represents 13 percent of total company revenue. For the full year, revenue in those countries was up 38 percent.
Michael Dell, chairman and chief executive officer: “I’m very pleased with our fiscal year results and the strong performance we’re seeing in our commercial businesses. We remain focused on developing and acquiring new technologies and capabilities, and our IT solutions portfolio has never been stronger. Customers are now seeing Dell in a fresh light, and we’re heading into the new year with strength and optimism.”
Brian Gladden, chief financial officer: “Our outstanding fourth quarter and full-year results align well with our long-term value creation framework, and we’re pleased with the sustainable operational improvements we’ve made across the company, including in our consumer business. With our strong cash flow, solid balance sheet and improving overall profitability, we believe we are well positioned to deliver strong performance for our shareholders.”
For its fiscal-year 2012, Dell expects revenue growth of 5 to 9 percent, non-GAAP operating income growth of 6 to 12 percent, and continued strong execution on cash flow with cash flow from operations exceeding net income. In its first quarter of fiscal-year 2012, Dell expects normal seasonal declines in its consumer and public businesses and, as such, a slight sequential decline in revenue.