Dell Inc's (Nasdaq:DELL) official industry designation is personal computers, but the company has worked feverishly to diversify out of this mature business for several years now. Unfortunately, its other businesses, which include tech services, servers and storage devices, are just as competitive. The stock's investment appeal will likely remain uncertain until Dell can prove it can grow its existing operations, though it's hard to argue with the prodigious cash flow generation.
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Full Year Recap
Revenue increased 1% to $62.1 billion. The mobility segment grew 1% and was the largest contributor to the top line, accounting for 31% of revenue. This business sells Dell's flagship laptops to businesses and consumers. Desktop PCs was the next largest product category at 23% and reported a 4% sales decline. Both of these businesses are facing very challenging industry conditions from rivals including Acer and Lenovo, as well as a new generation of tablet devices from the likes of Apple (Nasdaq:AAPL), Sony (NYSE:SNE) and bit players such as Research In Motion's (Nasdaq:RIMM) Blackberry devices. Mobile devices are also coming on strong.

Storage sales were much worse, falling 15% to $2 billion, or 3% of total revenues as competition from the likes of EMC (NYSE:EMC) was able to eat into Dell's sales. However, server revenue jumped 10 to 13% of sales and service revenue grew 8 to 13% of sales. Software sales were flat at 17% of the top line. But despite the tougher sales trends, Dell was able to sell them more profitably, which sent operating income up 29% to $4.4 billion. Net income ended up rising an even stronger 33% to $3.5 billion and share buybacks helped boost earnings per diluted share further, or 39% to $1.88. Free cash flow was impressively strong at $4.9 billion, or $2.62 per diluted share. (For related reading, see A Breakdown Of Stock Buybacks.)

Outlook
Dell expects a roughly 7% revenue decline for the coming year but plans to grow profits. Analysts are currently modeling flat sales and earnings of $2.11 per diluted share.

The Bottom Line
Dell investors are in a bit of a quandary. Profitability and free cash flow generation are high, but the outlook for sales growth remains extremely murky. For the company to move firmly forward and increase shareholder value, it will eventually need to return to consistent top-line growth. This could be very difficult as computers still account for half of sales and are facing some of their most intense competition since being invented in the early 1980s.

A new generation of laptops that more closely resemble tablets could help stem the slide. Unfortunately, Dells other divisions are just as competitive and all operate in the fast-changing technology industry. Service revenue looks stable and is extremely lucrative, but is just over one tenth of total sales. (For additional reading, check out 5 Must-Have Metrics For Value Investors.)

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At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.

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