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September 7, 2016

Dell posts flat Q2 on eve of EMC merger

Operating income returns to positive territory.

By CBR Staff Writer

Dell has posted modest revenue growth in its revenue for the second quarter of fiscal 2017, even as its personal computer division continued to see gains.

The company reported a revenue of $13.1bn for the three months ending 29 July, up just 1% compared to the same quarter a year ago.

However, Dell earned operating income of $63m in the quarter, reversing its loss of $103m in last year's quarter.

Dell chief financial officer Tom Sweet said: “Our second quarter results underscore our ability to consistently balance growth and profitability, and strategically invest in areas that will drive long-term profitable growth and strong cash flow.

“In the quarter, cash flow from operations was $1.9bn and for the trailing twelve months was $3.2bn, an improvement of 50%.”

Its revenue from commercial PC segment went up by 6.2% on year-over-year basis, while its consumer PC sales increased by 1.1% in terms of unit market share.

While revenue from servers and networking saw an increase of 1% in the three months, its storage SC product line revenue grew 13%.

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Dells reported $9.2bn revenue from its client solutions business, posting a flat growth compared to the corresponding period in 2015. However, its operating income the division stood at $484m, up 50%.

It said: “Operating income favorability was primarily driven by improved cost and balanced pricing decisions.

“We are also seeing growth in our attached software, peripherals and services business driven by growth in displays. In displays, we remained #1 in share, gaining unit share year-over-year for the 13th consecutive quarter.”

Its revenue from enterprise solutions group remained unchanged at $3.8bn in the quarter but operating income was up 7% to $300m.

The company said that it continued investing to help its customers to transition from traditional data centers to hybrid environments.

Dell said that it has also completed the acquisition of EMC.

Recently, it received Chinese regulatory approval for the acquisition of EMC, clearing the final hurdle for the $67bn deal.

The completion of the deal will see the new company, Dell Technologies, starting its operations from 7 September.

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