Dell Posts Revenue Jump Ahead of Voting on VMware Offer

Dell Technologies reported a 15 percent rise in quarterly revenue on Thursday, as businesses were forced to upgrade their systems running on older Windows technology and on strong performance by software maker VMware.

The results come ahead of voting on the company's offer to buy back shares tied to its 81 percent economic stake in VMware, which would allow Dell a return to public markets without going through the rigours of a traditional initial public offer process.

Dell earlier this month sweetened its cash-and-stock offer to $23.9 billion, winning backing from shareholders including Carl Icahn, who had opposed the initial bid, as well as from Elliott Management and Canyon Partners.

"We expect the transaction to close in this calendar year, with the projected close date and first day of trading for the Class C common stock on the NYSE under the ticker symbol 'DELL' on December 28," Dell's head of investor relations Robert Williams said on a conference call with analysts.

The offer is scheduled to be voted on December11.

Dell reported an 11 percent jump in revenue from its Client Solutions Group, which includes products such as desktop PCs, notebooks and tablets, and branded peripherals, for the third quarter ended November 2.

The gain was largely due to businesses looking to replace their older machines following Microsoft Corp's decision to stop all support for its Windows 7 operating system early in 2020.

"The market has reached a state of stabilization so far this year, primarily driven by strong commercial demand driven by Windows 10 upgrades, being linked to end of Windows 7 support," said Ishan Dutt, an analyst with research firm Canalys.

Dell held 17 percent of the global PC market share year-to-date, behind HP's 23 percent and Lenovo Group's 21 percent share, according to data from Canalys.

HP on Thursday reported an 11 percent rise in revenue in its personal systems business, which also topped analysts' estimates.

On the call, Dell executives said the company has successfully navigated the current list of tariffs.

"Where we have incurred in higher cost with tariffs, we can pass that through to end users," Chief Operating Officer Jeffrey Clarke said.

For fiscal year ending 2019, the company expects total adjusted revenue in the range of $90.5 billion and $92 billion. The company had reported adjusted revenue of $79.9 billion for the fiscal year ended February 2, 2018.

Total revenue rose 15 percent to $22.48 billion in the quarter, while net loss attributable widened to $876 million.

VMware posted robust results, beating on both profit and revenue estimates on strong demand for its software to boost cloud computing efficiency.

The company's shares, up about 30 percent this year, rose nearly 8 percent to $174.65 after the bell.

© Thomson Reuters 2018