Highlights From Dell's (DELL) Q1 Conference Call, Operating Income Grew 67% as Earnings Beat Expectations

Dell, Inc. (NASDAQ: DELL) reported its Q1 earnings with EPS of $0.55, $0.12 better than the analyst estimate of $0.43, while revenue for the quarter came in at $15 billion, versus the consensus estimate of $15.4 billion. Shares are currently trading up 5.53% to $16.79.

Highlights from the company Q1 conference:

•We gained or held revenue and profit share in most of our key customer segments and product verticals
•We delivered 23.4% gross margins, driven by continued, solid supply chain execution
•Operating income grew 67% to $1.4 billion or 9.2% of revenue
•We generated $465 million in cash flow from operations and have now delivered $4.2 billion in the trailing four quarters
•We ended the quarter with $15.2 billion in cash and investments
•We repurchased $450 million worth of stock
•Expects mid-single-digit sequential revenue growth in the second quarter, which is slightly above normal sequential growth of 2% to 3%
•Expects full-year tax rate to be between 21% and 23%
•As we move through fiscal year '12, we expect improving demand dynamics in the markets that are critical for us
•Confident in delivering its outlook of 5% to 9% revenue growth
•Believes Dell-owned storage and Dell Services are positioned for above-average industry growth
•We're now raising our total year operating income growth outlook to 12% to 18%
•We fine-tuned our focus on three key solution domains: next generation computing solutions and intelligent data management; services, security and cloud; and end user computing
•Launched an initiative to invest $1 billion to add solutions focused resources to build out data centers and solution centers to help our customers as they begin to migrate to private and public clouds
•We're updating our outlook in terms of the operating income growth for the year to 12 to 18%
•We're focused on driving to the 7% GAAP operating income target
•We're not going to provide either gross margin OpEx guidance specifically. But as we see strong profitability in the business, we're going to continue to invest for the future
•We haven't changed our capital allocation strategy that we've been communicating
•Clearly, mix is one of the drivers. And it's clearly where we're focused in terms of strategically driving the company
•Driving the higher value products and services and solutions across every segment of the business is what's happening here
•When you go into the enterprise, customers are looking at security. They're looking at applications. They're looking at a robust set of offerings. Those are still being formed. And we're very much active with a number of partners to create those and form them. And as that all comes together, I think you'll see us be very present in that market
•We're not changing the strategy. We're going to continue to lean
on profit. We think we're in a spot now where we can begin to grow the
business as well while maintaining some pretty good profit
•We absolutely think it's going to grow. As you think about it, we're in a quarter where we're continuing to build out the portfolio and a pretty dramatic shift in the focus. Obviously, a lot going on with the close of the Compellent transaction
•EMC dynamics in the quarter, we've added significantly to the storage specialist population
•Margins continue to expand overall, even within the quarter. The pipeline
looks very good, very optimistic about that, and we expect to see strong growth there

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