Posts Tagged ‘Dell’

Dell To Buy Cloud-Software Maker Wyse Technology

April 3rd, 2012

-Dell Inc. (DELL) agreed to acquire Wyse Technology Inc., the latest move by the computer maker to expand its offerings for business customers.

Financial terms weren’t disclosed. Dell expects the deal to close in the second quarter and said it should add to earnings in the second half of fiscal 2013.

Wyse provides software and hardware that play into the trend called cloud computing. The company, founded in 1981, originally was known for desktop terminals that could take the place of personal computers. Wyse said it has shipped more than 20 million of the devices it now calls thin clients.

The San Jose, Calif., company later branched into related technologies such as desktop virtualization, which allows computers to remotely access applications and documents stored on a server without storing the information on the device. Wyse also provides software that allows companies to securely and remotely manage their devices.

Demand has been rising for such products. Wyse’s revenue rose 45% in its last fiscal year, said Dave Johnson, Dell senior vice president of corporate strategy. By comparison, the industry’s revenue, on average, rose in the mid-teens on a percentage basis, he said.

“Wyse is an independent entity that’s really been gaining momentum to grow into a No. 1 market share position,” Johnson said during a conference call to discuss the acquisition. He added that Dell plans to bolster Wyse’s hardware business.

Wyse’s 12-month trailing revenue totaled about $375 million, Dell said. In addition, its operating margins were in the double digits, Johnson said.

Dell shares, up 15% over the past 12 months, rose 1.4% to $16.82 in recent trading.

Faced with soft PC sales, Dell has been increasing its focus on high-margin business products including storage products, security, services and networking. Since 2009, the company has acquired about a dozen companies–from its $3.9 billion purchase of IT-services company Perot Systems Corp. to much smaller companies such as SecureWorks and Boomi Inc. that sell software as a service.

The deal for Wyse helps the Round Rock, Tex. computer company broaden its software offerings–a weaker area for the world’s third-largest PC maker by sales behind Hewlett-Packard Co. (HPQ) and Lenovo Group Ltd. (LNVGY, 0992.HK). It recently hired private-equity executive and former CA Inc. (CA) head John Swainson to shore up its software business as its seeks to focus on higher-margin operations like software and data-storage systems.

ISI Group analyst Brian Marshall noted the deal makes strategic sense for Dell “as a way to leverage its massive installed base of PCs and intersect future secular growth trends,” such as desktop virtualization.

Dell has had some success moving into new markets, but hurdles remain. Competitors such as H-P and EMC Corp. (EMC) still overshadow the company in terms of enterprise-product sales. In addition, some of the new areas Dell is entering–such as cloud computing–already are competitive and bring new rivals such as Amazon.com Inc. (AMZN).

The company reported in February its fiscal fourth-quarter earnings fell 18% as a shortage of disk drives hurt its ability to sell higher-end computers, though revenue edged up 2.2%.

Source:http://online.wsj.com/article/BT-CO-20120402-713465.html

Dell To Buy Cloud Software Maker Wyse Technology

April 2nd, 2012

Dell Inc. (DELL) agreed to acquire cloud-computing software provider Wyse Technology Inc. as the computer maker looks to extend its virtual desktop offerings.

Financial terms weren’t disclosed.

Dell–the world’s third-largest PC maker by sales behind Hewlett-Packard Co. (HPQ) and Lenovo Group Ltd. (LNVGY, 0992.HK)–recently hired private-equity executive and former CA Inc. (CA) head John Swainson to shore up its software business as its looks to focus on higher-margin operations like software and data-storage systems.

The company also agreed in February to buy backup and replication software maker AppAssure Software Inc., Dell’s first software acquisition since it formed its software group.

Dell expects to close the Wyse Technology deal in the second quarter and said it should add to earnings in the second half of fiscal 2013.

The company reported in February its fiscal fourth-quarter earnings fell 18% as a shortage of disk drives hurt its ability to sell higher-end computers, though revenue edged up 2.2%.

Shares closed Friday at $16.59 and were inactive premarket. The stock has gained 13% so far this year.

Source:http://www.nasdaq.com/article/dell-to-buy-cloud-software-maker-wyse-technology-20120402-00652

Dell Inc. Earnings Call Cheat Sheet: Gross Margin, Revenues and Software Strategy

March 6th, 2012

On Tuesday, February 21st, Dell Inc (NASDAQ:DELL) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Gross Margin and Revenue Growth

Toni Sacconaghi – Sanford C. Bernstein: I have one question and one follow-up please. I am still struggling a little bit on the forces that work on gross margin. I would have thought that pruning your software and peripherals portfolio would have helped margins on a sequential basis in the quarter, I would have thought DRAM pricing, which was down strongly, would have helped margins in the quarter, yet margins were down 150 basis points sequentially on higher volumes suggesting that ex those other factors maybe they were down 200 basis points. I struggle with given that consumer is only 20% of the mix, that hard drives could have that dramatic an impact. So maybe you can go through each of the three reasons you’ve sighted and attribute or maybe refute the notion that pruning in other components were not a help, but I am still struggling with why gross margins were down so much?

Brian T. Gladden – SVP and CFO: Yeah, Tony I think, the points you raised are all correct. I think those were things that would have contributed to positive momentum on gross margins. We clearly talked about coming into the quarter some of the concerns we had around margins. I am talking about the three items that we’ve raised. For hard disks we had uncertainty coming into the quarter. We had significant inflation that came from the hard disk situation. We did effectively raise prices to offset that. The teams did a great job of getting supply to support the demand that we had, but we just didn’t get the mix of drives that we wanted and it really forced us to sell lower or less configured lower end systems and prevented us from accessing higher margin more highly configured systems. That played out across the portfolio, but especially in consumer. I would say within our aftermarket sales of hard disks was in the S&P business. So that’s the one dynamic that I think we didn’t fully understand coming into the quarter what that mix was going to do to us. On the mobility side we talked about, we wrote off previous generation phones, that was about $25 million impact in the quarter quarter-on-quarter and that is something that we would say is behind us now. Then on the public side, clearly talked about the weakened demand that we saw after the federal yearend in the U.S. especially, there was weaker demand and I would say we saw a bigger sequential decline in that business, which had a mix impact, but also I would say was a more competitive environment within public and in some cases market pricing was more aggressive. And we participated in parts of that and that had an impact as well. So those are three big things that I would call out as about $100 million you could say, 70 basis points gross margin, and there were other moving pieces as you look at other commodity prices and other dynamics in the quarter.

Toni Sacconaghi – Sanford C. Bernstein: Then a follow-up, at your Analyst Day last year you articulated a longer term model of 5% to 7% revenue growth I think ex the 53rd week, this year you were about flat. It sounds like given the way that you’ve given guidance for fiscal ’13 you are really not anticipating revenue growth again this year. I was wondering and I realize you are going to address this at your Analyst Day. But if that was truly meant to be longer term guidance and you seem hesitant to reiterate it. What has fundamentally changed about the either to competitive environment or about Dell’s approach to the business that makes you less confident about talking about that, talking about that as a longer term goal and also obviously in delivering against it in fiscal ’12 and fiscal ’13?
Brian T. Gladden – SVP and CFO: Toni, we’ll give you a much better long term view as we get into the June meeting. I think clearly it’s a different demand environment. And there is more uncertainty, as you look at things like Europe as you look at some of the demand dynamics we’ve seen over the past year, that’s number one. I think in addition to that we’ve been more aggressive I think in pruning and I think that to some extent will continue for some period of time and by not giving you a real revenue outlook for the year I think it give us an ability to make the right decisions for the long term continue this transformation and make the investments we need and not get so fixated on trying to deliver a specific revenue commitment.

Software Strategy
Mark Moskowitz – JPMorgan: The first question is around just the software strategy if Michael if you could weigh in here, you recently accreted the new business unit with new leaderships from an industry veteran. Can you just kind of help us understand how we should think about potential milepost in terms of revenue as well as also the gross margin contribution?

Michael S. Dell – Chairman and CEO: Sure. Software obviously is playing an increasingly important role in the industry. We’ve made a number of acquisitions around software and systems management with case and cloud integration with Boomi and infrastructure virtualization and orchestration with Scalent, and I think you’ll see others as well fitting within very similar framework that we’ve used in the past. John Swainson is joining the Company to lead this group for us and we see a lot of opportunity in close adjacencies. We’ve had a lot of success with the number of the acquisitions that have been software related and believe there are significant opportunities for us to build a big business here. Don’t really have any revenue projections for you at this stage, but clearly it’s a significant opportunity for us and we are thrilled to have John joining the Dell team.

Mark Moskowitz – JPMorgan: A question for Brian or Steve, just trying to get a sense here in terms of the sales and marketing and the R&D dynamics as we look to 2013, obviously sales and marketing was a big push this past year and it definitely supported your enterprise solutions growth. We just want to get a better sense here as we continue here more and more about the non-PC part of the business, do you guys have the flexibility maybe to pullback on sales and marketing now, maybe drop some of that to the bottom line in 2013 and then maybe reallocate some of it to R&D to kind of support the build-out and the other non-PC build outs?

Stephen J. Felice – President, Chief Commercial Officer: We did do a lot investing, we had a lot of specialists, we added a lot to our capabilities with some of the acquisitions we have done and toward the end of this year we had already started to communicate that we felt we had added the investment that we could now grow into that in a productive way. So, you will see going forward a return to a more disciplined approach to the investments to have the OpEx match the revenue. We think we have the resources in place to support some growth, especially in the solutions and enterprise areas and that’s really where we focus the investment. So, you definitely won’t see the same kind of growth that you saw last year in the operating expense.

Source:http://wallstcheatsheet.com/stocks/dell-inc-earnings-call-cheat-sheet-gross-margin-revenues-and-software-strategy.html/

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