Dell Parent Denali Reports Weaker-than-Expected Results
June 10 2016 - 10:20AM
Dow Jones News
Dell Inc.'s parent company Denali Holdings on Friday reported an
operating loss that was wider than it had predicted just last
month, due to costs stemming from Dell's pending acquisition of EMC
Corp. and softer-than-expected sales.
Denali, based in Round Rock, Texas, posted an operating loss of
$161 million for the quarter ended April 30, an improvement from
last year's loss of $335 million but steeper than the $100 million
it had guided for on May 13.
During the period, Denali booked $90 million in costs classified
as "other corporate expenses," a bucket that includes
merger-and-acquisition related charges. That was up from $36
million a year earlier.
Dell in October unveiled a cash-and-stock deal to buy
data-storage company EMC in the biggest-ever merger in the
technology industry. On Wednesday, The Wall Street Journal reported
that Dell was set to sell $3.25 billion in debt this week as part
of its effort to finance the transaction.
Aside from the costs associated with Dell's merger,
weaker-than-expected revenue also cut into Denali's bottom line.
Sales fell 2.4% from a year earlier to $12.5 billion, driven by a
decline in revenue from the company's client and enterprise groups,
and as Dell software sales were flat. The company had forecast
$13.2 billion last month.
Because of a $481 million gain from discontinued operations—Dell
said in March that it would sell its information-technology
services unit for about $3.1 billion—Denali reported an overall
profit of $55 million. A year earlier, the company posted a loss of
$504 million.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
June 10, 2016 10:05 ET (14:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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