Dell results show continued shift

Dell reported poor results and has taken quite a hit with shares down 17% yesterday.
From my view the key statistic here was lost in the overall decline which was led by PC sales. As I have indicated before Dell is a turnaround story based on moving from box shifter to solutions supplier to the Fortune 100. Its going to take time and meanwhile these dips are opportunities to buy. The key statistic was

Enterprise Solutions and Services revenue increased 17 percent, led by services revenue growth of 23 percent and servers and networking of 16 percent. 

Results

• Revenue in the quarter was $14.4 billion, a 4 percent decrease from the previous year.
• GAAP earnings per share in the quarter was 36 cents, down 27 percent from the previous year; non-GAAP EPS was 43 cents, down 22 percent.
• GAAP operating income for the quarter was $824 million, or 5.7 percent of revenue. Non-GAAP operating income was $1 billion, or 7 percent of revenue.
• Cash used in operations in the quarter was $138 million. For the past four quarters, Dell has generated $4.9 billion in cash flow. Dell ended the quarter with $17.2 billion in cash and investments. 

Strategic Highlights:

• Dell Enterprise Solutions and Services revenue grew 2 percent year over year to $4.5 billion and contributed half of Dell’s gross margin. The ESS revenue grew 5 percent excluding third-party storage.
• Dell Services revenue was $2.1 billion, up 4 percent. Services backlog increased 9 percent to $15.4 billion.
• Dell-owned storage grew 24 percent to $423 million .
• Server and networking revenue grew 2 percent.

Business Units and Regions:

• Large Enterprise revenue was $4.4 billion in the quarter, a 3 percent decline. Operating income for the quarter was $402 million, or 9.1 percent of revenue.
• Public revenue was $3.5 billion, a 4 percent decrease. O perating income for the quarter was $271 million, or 7.8 percent of revenue.
• Small and Medium Business revenue grew 4 percent to $3.5 billion. Enterprise Solutions and Services revenue increased 17 percent, led by services revenue growth of 23 percent and servers and networking of 16 percent. SMB had $389 million in operating income, or 11.2 percent of revenue.
• Consumer revenue was $3 billion, a 12 percent decline. Operating income was $32 million or 1.1 percent of revenue.
• Asia-Pacific and Japan revenue was flat but China increased 9 percent. EMEA revenue was down 1 percent in the quarter. Americas was down 7 percent. Revenue in the BRIC countries increased 4 percent.