Dell Reports Rising Sales Amid Planned Return to Public Markets

Nico Grant (Bloomberg) -- Dell Technologies Inc., the world’s largest closely held technology company, reported growing sales, and increased its outlook for the year, in the midst of its $21.7 billion plan to return to public markets.

Second-quarter revenue increased 18 percent to $22.9 billion in the period ended Aug. 3, the Round Rock, Texas-based company said Thursday in a statement. Adjusted earnings before interest, tax, depreciation and amortization climbed 13 percent to $2.46 billion. For fiscal 2019, Dell now expects adjusted revenue of as much as $92 billion and adjusted net income of as much as $5.3 billion.

The strong performance in the second fiscal quarter may boost Chief Executive Officer Michael Dell’s efforts to shepherd the hardware maker to a public listing, five years after taking it private. To bolster growth, Dell has revamped its lineup of personal computers and sought closer product tie-ups with fast-growing software maker VMware Inc., in which the company owns a controlling stake. The efforts, aided by a favorable environment for corporate information technology spending, seem to be paying off.

Dell has sought to improve its profits in a bid to service its long-term debt, which stood at more than $44 billion as of May 4, according to an August regulatory filing. Much of the debt stems from the company’s $67 billion takeover of EMC Corp. in 2016. Dell’s income excluding some items jumped 21 percent to $1.3 billion in the quarter.

The earnings release marks investors’ last opportunity to see whether Dell is on track to meet its robust sales expectations before voting on the company’s proposal to buy out its tracking stock, DVMT, in October.

Dell’s sales growth estimates have directly influenced the company’s stated $48.4 billion enterprise value. The valuation has been a key point of contention in Dell’s effort to return to the public markets, Bloomberg reported in July, with some investors believing that shares of Dell should be worth less than the company estimated.

Shares of DVMT, which is meant to mimic the value of VMware, were unchanged in early trading, after closing down 0.5 percent to on Wednesday $95.69.