Dell Parent Denali Reports Weaker-than-Expected Results

By Lisa Beilfuss 

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 [e-mail]

(END) Dow Jones Newswires

June 10, 2016 09:55 ET (13:55 GMT)

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