For the first time since going private in 2013, Dell has given us a peek into its financial condition.
It did so in a filing with the SEC as part of its planned $67 billion acquisition of EMC, the largest in tech history.
Dell’s annual revenues have increased about 2% in the two years since it last reported its finances publicly.
Annual revenues went from $56.9 billion in its fiscal year ended February 1, 2013, to $58.1 billion in its fiscal year ended January 30, 2015. But they haven’t bounced back to the 2012 peak of $62.1 billion in the fiscal year ended February 3, 2012.
Over the same period, gross margin cash declined from $12.2 billion to $10.2 billion. Dell also swung from a $2.4 billion net profit to a -$1.2 billion net loss during that period.
For the six months ended July 31, 2015, revenues were down about 6% compared to the year-ago quarter, from $29.5 billion to $27.5 billion.
It is still carrying about $11 billion in debt on its books from its $24.4 billion go-private deal. Dell borrowed $13.9 billion to make that deal happen. It has paid off about $4.5 billion of that debt in two years, including paying Microsoft back the entire $2 billion borrowed from that company as part of his go-private financing deal. So Michael Dell is technically no longer indebted to Microsoft.
The filing also confirms earlier reports that Dell plans to borrow about $50 billion ($49.5 billion, it says) to finance its acquisition of EMC (and refinance the debt it still has on its books).
It will also use $7.7 billion of cash from EMC and Dell to help pay the costs and it has arranged to sell $4.5 billion worth of equity.
Meanwhile, Dell is also spinning out assets, as seen in the IPO forms it just filed to turn SecureWorks into a public company. It is also reportedly raising money by trying to sell units like its SonicWall security business and Quest Software for a reported $2 billion each, and its outsourcing business, Perot Systems, for a reported $5 billion.
Most of what this SEC filing reveals has already been reported in the press. Still it’s not every day that someone (even a billionaire) says, “Yes, I’ll take on $50 billion of debt and orchestrate the largest IT acquisition in history to achieve my vision for my company.”
Some of his competitors, think he’s crazy – like Hewlett Packard Enterprise CEO Meg Whitman, who issued an email to her troops warning that servicing so much debt would drag Dell down.
But other competitors think he’s brilliant, like Michael Dell’s friend Larry Ellison, who calls the deal “spectacular” and says that all the parties involved are going to make “billions of dollars.”