Segment Information (Notes)

6 Months Ended

Aug. 02, 2013

Segment Reporting [Abstract]

Segment Information

NOTE 14 — SEGMENT INFORMATION

During the first quarter of Fiscal 2014, Dell completed the reorganization of its reportable segments from the customer-centric segments it maintained through Fiscal 2013 to reportable segments based on the following product and services business units:

• End-User Computing ("EUC")

• Enterprise Solutions Group ("ESG")

• Dell Software Group

•Dell Services

EUC includes notebooks, desktop PCs, thin client products, tablets, third-party software, and EUC-related peripherals. ESG includes servers, networking, storage, and ESG-related peripherals. The Dell Software Group includes systems management, security, and information management software offerings, and Dell Services includes a broad range of IT and business services, including support and deployment services, infrastructure, cloud, and security services, and applications and business process services.

Dell has recast prior period amounts to be consistent with the reorganized segment structure. The change in Dell's segments did not impact Dell's previously reported consolidated net revenue, gross margin, operating income, net income, or earnings per share.

The reportable segments disclosed herein are based on information reviewed by Dell's management to evaluate the segment results. Dell's measure of segment operating income for management reporting purposes excludes amortization of intangible assets, severance and facility action costs and acquisition-related charges, unallocated corporate expenses, and the Merger-Related Costs. See Note 1 of the Notes to the Condensed Consolidated Financial Statements for more information on the proposed merger. Dell does not allocate assets to the above reportable segments for internal reporting purposes.

The following tables present net revenue and operating income by Dell's reportable segments for the respective periods:

	Three Months Ended
	August 2, 2013
	End-User Computing		Enterprise Solutions Group		Dell Software Group			Dell Services		Total Segments
	(in millions)
Net Revenue:
External revenue	$	8,899	$	3,173	$	310		$	2,132	$	14,514
Internal revenue (a)	240		151		—			4		395
Total segment revenue	$	9,139	$	3,324	$	310		$	2,136	$	14,909
Segment operating income (loss)	$	205	$	137	$	(62	)	$	339	$	619
	August 3, 2012
	End-User Computing		Enterprise Solutions Group		Dell Software Group			Dell Services		Total Segments
	(in millions)
Net Revenue:
External revenue	$	9,353	$	2,941	$	95		$	2,094	$	14,483
Internal revenue (a)	218		145		—			3		366
Total segment revenue	$	9,571	$	3,086	$	95		$	2,097	$	14,849
Segment operating income (loss)	$	696	$	151	$	(11	)	$	336	$	1,172
	Six Months Ended
	August 2, 2013
	End-User Computing		Enterprise Solutions Group		Dell Software Group			Dell Services		Total Segments
	(in millions)
Net Revenue:
External revenue	$	17,613	$	6,132	$	605		$	4,238	$	28,588
Internal revenue (a)	446		285		—			7		738
Total segment revenue	$	18,059	$	6,417	$	605		$	4,245	$	29,326
Segment operating income (loss)	$	429	$	273	$	(147	)	$	709	$	1,264
	August 3, 2012
	End-User Computing		Enterprise Solutions Group		Dell Software Group			Dell Services		Total Segments
	(in millions)
Net Revenue:
External revenue	$	18,985	$	5,622	$	133		$	4,165	$	28,905
Internal revenue (a)	418		280		—			5		703
Total segment revenue	$	19,403	$	5,902	$	133		$	4,170	$	29,608
Segment operating income (loss)	$	1,335	$	230	$	(17	)	$	674	$	2,222

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^(a)  Internal revenues primarily consist of origination fees related to the sale of extended warranty services within EUC and ESG. The pricing for these transactions is based on the value related to extended warranty services created by each of the segments.

The following tables present a reconciliation of total segment revenue and operating income to consolidated net revenue and operating income, respectively, for the periods presented below:

	Three Months Ended						Six Months Ended
	August 2, 2013			August 3, 2012			August 2, 2013			August 3, 2012
	(in millions)
Consolidated Net Revenue:
Total segment revenue	$	14,909		$	14,849		$	29,326		$	29,608
Less internal revenue	(395		)	(366		)	(738		)	(703		)
Total consolidated net revenue	$	14,514		$	14,483		$	28,588		$	28,905
Consolidated Operating Income:
Segment operating income	$	619		$	1,172		$	1,264		$	2,222
Unallocated corporate expenses (a)	(17		)	(49		)	(72		)	(89		)
Amortization of intangible assets	(196		)	(150		)	(392		)	(260		)
Severance and facility actions and acquisition-related costs (b)	(87		)	(72		)	(167		)	(148		)
Other (c)	(47		)	—			(135		)	—
Total consolidated operating income	$	272		$	901		$	498		$	1,725

____________________ 

^(a)  Unallocated corporate expenses include broad based long-term incentives, certain short-term incentive compensation expenses, and other corporate items that are not allocated to Dell's segments.

^(b)  Acquisition-related costs consist primarily of retention payments, integration costs, and consulting fees.

^(c)  Other includes expenses associated with Dell's proposed merger. These expenses consist of professional fees incurred by Dell as well as the reimbursement of transaction-related expenses incurred by certain participants approved by a Special Committee of the Board of Directors. Expenses associated with Dell's proposed merger also include special performance-based retention cash awards granted to certain key employees in the first quarter of Fiscal 2014 that will be payable in March 2014. These awards are expensed ratably over the performance period.

The following table presents net revenue by product and services categories:

	Three Months Ended						Six Months Ended
	August 2, 2013			August 3, 2012			August 2, 2013			August 3, 2012
	(in millions)
Net Revenue:
End-User Computing:
Desktops and thin client	$	3,550		$	3,504		$	6,823		$	6,839
Mobility	3,569			3,946			7,187			8,274
Third-party software and peripherals	2,020			2,121			4,049			4,290
Total EUC revenue	9,139			9,571			18,059			19,403
Enterprise Solutions Group:
Servers, peripherals, and networking	2,892			2,622			5,561			4,965
Storage	432			464			856			937
Total ESG revenue	3,324			3,086			6,417			5,902
Dell Software Group(a):
Total Dell Software Group revenue	310			95			605			133
Dell Services:
Support and deployment	1,223			1,192			2,425			2,368
Infrastructure, cloud, and security	601			574			1,213			1,124
Applications and business process	312			331			607			678
Total Dell Services revenue	2,136			2,097			4,245			4,170
Total segment revenue	14,909			14,849			29,326			29,608
Less internal revenue	(395		)	(366		)	(738		)	(703		)
Total consolidated net revenue	$	14,514		$	14,483		$	28,588		$	28,905

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^(a)  Includes the results of Dell's Fiscal 2013 software acquisitions from their respective acquisition dates.