Michael Dell flags channel revenue surge

The comments come as Dell Technologies eyes up a possible IPO or VMware "combination"
Michael Dell - Chairman and CEO, Dell Technologies

Michael Dell - Chairman and CEO, Dell Technologies

Dell Technologies chairman and chief, Michael Dell, has revealed that the group’s channel sales revenue surged by “double digits” in the first six months of its 2018 financial year.

Dell, who released a statement via a United States Securities and Exchange Commission (SEC) filing as part of his company’s confirmation it is exploring a potential IPO or merger with VMware, suggested that the channel revenue increase reflects partners’ faith in the group’s ongoing strategy.

“Our customers believe in what we’re doing with 91 per cent saying Dell and EMC have delivered on their pre-merger promises,” Dell said in the filing. “And our partners believe in what we’re doing with Global Channels revenue up double-digits in first half of FY18.”

Dell’s comments relate to channel revenue generated during the six months ending 4 August 2017.

“Additionally, VMware has enjoyed tremendous success since joining the Dell Technologies family, delivering innovative new solutions and double-digit growth,” Dell said.

“We would normally keep our deliberations confidential until a particular course of action is determined, but because Dell Technologies owns [approximately] 82 per cent of VMware, we are required to make a public filing with the US Securities and Exchange Commission,” he said.

During the period highlighted by Dell, the group as a whole reported net revenue of US$37.1 billion, 47 per cent up from the same period the year prior.

At the same time, the group reported a US$2.4 billion net loss from continuing operations, while racking up adjusted (non-GAAP) earnings before interest, tax, depreciation and amortisation (EBITDA) of US$3.4 billion for the six month period.

Following mounting speculation, Dell Technologies revealed on 2 February it is exploring new options for the company, considering a public offering (IPO) of common stock or a “combination” with VMware, its publicly held subsidiary. A decision expected to materialise in a matter of weeks.

Dell, the world's largest privately held technology company, is under pressure to boost profitability after its debt-laden acquisition of data storage provider EMC for US$67 billion in 2016 failed to meet financial targets, hurt by intensifying price competition.

Mid-last year, analysts flagged some “hurdles” for Dell Technologies, with the company reporting at the time a US$1.5 billion operating loss in its first 2017 quarter.

While flagging the various options to help bolster his company’s financials, Dell said in the latest SEC filing that, “I remain completely committed to our mission and extremely excited about the opportunities ahead.”