Dell Technologies Reports Fiscal Year 2019 Third Quarter Financial Results

This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies' Annual Report on Form 10-K for the fiscal year ended February 2, 2018, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC's website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of its date. Dell Technologies does not undertake to update, and expressly disclaims any duty to update, its forward-looking statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.

No Offer or Solicitation:
This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933 and otherwise in accordance with applicable law.

Additional Information and Where to Find It:
This communication is being made in respect of the proposed merger of a wholly-owned subsidiary of Dell Technologies Inc. (the "Company") with and into the Company, with the Company as the surviving entity, pursuant to which each share of Class V common stock of the Company will, at the election of the holder, convert into the right to receive shares of Class C common stock of the Company or cash, without interest, and each existing share of Class A common stock, Class B common stock and Class C common stock of the Company will be unaffected by the merger and remain outstanding. The proposed transaction requires the approval of a majority of the aggregate voting power of the outstanding shares of Class A common stock, Class B common stock and Class V common stock other than those held by affiliates of the Company, in each case, voting as a separate class, and all outstanding shares of common stock of the Company, voting together as a single class, and will be submitted to stockholders for their consideration. The Company has filed a registration statement on Form S-4 (File No. 333-226618). The registration statement was declared effective by the SEC on October 19, 2018, and a definitive proxy statement/prospectus was mailed on or about October 23, 2018 to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. The Company also filed a supplement to the definitive proxy statement/prospectus on November 26, 2018, which was mailed on or about November 26, 2018 to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, THE SUPPLEMENT AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may get these documents, when available, for free by visiting EDGAR on the SEC website at www.sec.gov or by visiting the Company's website at http://investors.delltechnologies.com.

Participants in the Solicitation:
The Company and its consolidated subsidiaries and their directors, executive officers and other members of their management and employees, and Silver Lake Technology Management, L.L.C. and its managing partners and employees, may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in favor of the proposed merger and the other transactions contemplated by the amended merger agreement, including the exchange of shares of Class V common stock of the Company for shares of Class C common stock of the Company or cash. Information concerning persons who may be considered participants in such solicitation under the rules of the SEC, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in the aforementioned proxy statement/prospectus and the supplement that have been filed with the SEC.

DELL TECHNOLOGIES INC.

Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights

(in millions, except per share amounts and percentages; unaudited)














Three Months Ended




Nine Months Ended




November 2, 2018


November 3, 2017


Change


November 2, 2018


November 3, 2017


Change

Net revenue:












Products

$

17,625


$

15,120


17 %


$

52,445


$

43,856


20 %

Services

4,857


4,436


9 %


14,335


13,221


8 %

Total net revenue

22,482


19,556


15 %


66,780


57,077


17 %













Cost of net revenue:












Products

14,565


12,573


16 %


43,114


37,171


16 %

Services

1,974


1,763


12 %


5,722


5,261


9 %

Total cost of net revenue

16,539


14,336


15 %


48,836


42,432


15 %













Gross margin

5,943


5,220


14 %


17,944


14,645


23 %













Operating expenses:












Selling, general, and administrative

5,159


4,559


13 %


15,064


13,695


10 %

Research and development

1,140


1,071


6 %


3,402


3,297


3 %

Total operating expenses

6,299


5,630


12 %


18,466


16,992


9 %













Operating loss

(356)


(410)


13 %


(522)


(2,347)


78 %













Interest and other, net

(639)


(682)


6 %


(1,564)


(1,799)


13 %

Loss before income taxes

(995)


(1,092)


9 %


(2,086)


(4,146)


50 %

Income tax benefit

(100)


(241)


59 %


(192)


(1,353)


86 %

Net loss

(895)


(851)


(5)%


(1,894)


(2,793)


32 %

Less: Net income (loss) attributable to non-controlling interests

(19)


(5)


280 %


117


(44)


(366)%

Net loss attributable to Dell Technologies Inc.

$

(876)


$

(846)


(4)%


$

(2,011)


$

(2,749)


27 %













Earnings (loss) per share attributable to Dell Technologies Inc. - basic:












   Class V Common Stock - basic

$

0.83


$

0.98




$

4.80


$

2.58



   DHI Group - basic

$

(1.84)


$

(1.84)




$

(5.23)


$

(5.78)















Earnings (loss) per share attributable to Dell Technologies Inc. - diluted:












   Class V Common Stock - diluted

$

0.81


$

0.96




$

4.72


$

2.54



   DHI Group - diluted

$

(1.84)


$

(1.84)




$

(5.25)


$

(5.79)















Weighted-average shares outstanding:












   Basic - Class V Common Stock

199


202




199


204



   Diluted - Class V Common Stock

199


202




199


204



   Basic - DHI Group

567


567




567


567



   Diluted - DHI Group

567


567




567


567















Percentage of Total Net Revenue:












Gross margin

26 %


27 %




27 %


26 %



Selling, general, and administrative

23 %


23 %




23 %


24 %



Research and development

5 %


5 %




5 %


6 %



Operating expenses

28 %


29 %




28 %


30 %



Operating loss

(2)%


(2)%




(1)%


(4)%



Loss before income taxes

(4)%


(6)%




(3)%


(7)%



Net loss

(4)%


(4)%




(3)%


(5)%















Income tax rate

10.1 %


22.1 %




9.2 %


32.6 %




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