Dell Technologies Reports Fiscal Year 2018 Third Quarter Financial Results

 

 

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited)

                       
 

Three Months Ended

     

Nine Months Ended

   
 

November 3, 2017

 

October 28, 2016

 

Change

 

November 3, 2017

 

October 28, 2016

 

Change

Client Solutions Group (CSG):

                     

Net Revenue:

                     

Commercial

$                     6,907

 

$                     6,400

 

8 %

 

$                   20,453

 

$                   19,343

 

6 %

Consumer

3,052

 

2,787

 

10 %

 

8,413

 

7,635

 

10 %

Total CSG net revenue

$                     9,959

 

$                     9,187

 

8 %

 

$                   28,866

 

$                   26,978

 

7 %

                       

Operating Income:

                     

CSG operating income

$                        672

 

$                        634

 

6 %

 

$                     1,612

 

$                     1,503

 

7 %

% of CSG net revenue

7 %

 

7 %

     

6 %

 

6 %

   

% of total segment operating income

34 %

 

30 %

     

34 %

 

44 %

   
                       

Infrastructure Solutions Group (ISG):

                     

Net Revenue:

                     

Servers and networking

$                     3,851

 

$                     2,910

 

32 %

 

$                   10,822

 

$                     9,222

 

17 %

Storage

3,667

 

3,079

 

19 %

 

11,018

 

4,159

 

165 %

Total ISG net revenue

$                     7,518

 

$                     5,989

 

26 %

 

$                   21,840

 

$                   13,381

 

63 %

                       

Operating Income:

                     

ISG operating income

$                        678

 

$                        897

 

(24)%

 

$                     1,431

 

$                     1,389

 

3 %

% of ISG net revenue

9 %

 

15 %

     

7 %

 

10 %

   

% of total segment operating income

34 %

 

43 %

     

30 %

 

40 %

   
                       

VMware:

                     

Net Revenue:

                     

Total VMware net revenue

$                     1,953

 

$                     1,289

 

52 %

 

$                     5,596

 

$                     1,289

 

334 %

                       

Operating Income:

                     

VMware operating income

$                        639

 

$                        548

 

17 %

 

$                     1,686

 

$                        548

 

208 %

% of VMware net revenue

33 %

 

43 %

     

30 %

 

43 %

   

% of total segment operating income

32 %

 

26 %

     

36 %

 

16 %

   
                       

Reconciliation to consolidated net revenue:

                     

Reportable segment net revenue

$                   19,430

 

$                   16,465

     

$                   56,302

 

$                   41,648

   

Other businesses (a)

475

 

312

     

1,409

 

530

   

Unallocated transactions (b)

 

     

(1)

 

63

   

Impact of purchase accounting (c)

(295)

 

(530)

     

(985)

 

(673)

   

Total net revenue

$                   19,610

 

$                   16,247

     

$                   56,725

 

$                   41,568

   
                       

Reconciliation to consolidated operating income (loss):

                     

Reportable segment operating income

$                     1,989

 

$                     2,079

     

$                     4,729

 

$                     3,440

   

Other businesses (a)

6

 

(13)

     

10

 

(48)

   

Unallocated transactions (b)

(9)

 

(91)

     

(4)

 

(122)

   

Impact of purchase accounting (c)

(366)

 

(850)

     

(1,195)

 

(1,054)

   

Amortization of intangibles

(1,734)

 

(1,164)

     

(5,250)

 

(2,146)

   

Transaction-related expenses (d)

(86)

 

(1,200)

     

(415)

 

(1,329)

   

Other corporate expenses (e)

(333)

 

(273)

     

(887)

 

(325)

   

Total operating loss

$                      (533)

 

$                   (1,512)

     

$                   (3,012)

 

$                   (1,584)

   

_________________

                     

(a) Other businesses consist of RSA Information Security, SecureWorks, Pivotal, and Boomi, and do not constitute a reportable segment, either individually or collectively, as the results of the businesses are not material to the Company's overall results and the businesses do not meet the criteria for reportable segments.

(b) Unallocated transactions includes long-term incentives, certain short-term incentive compensation expenses, and other corporate items that are not allocated to Dell Technologies' reportable segments.

(c) Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction.

(d) Transaction-related expenses includes acquisition, integration, and divestiture related costs.

(e) Other corporate expenses includes severance and facility action costs as well as stock-based compensation expense.


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