Good morning. Dell Technologies is having a year of milestones with its 40th anniversary, a return to the S&P 500 index, and tremendous momentum in the AI server business.
S&P Dow Jones Indices announced on Sept. 6 that the tech giant would rejoin the S&P 500—a stock market index that comprises 500 publicly traded, U.S.-based companies with high market capitalization—effective prior to the open of trading on Sept. 23.
“There was super excitement from Michael all the way down,” Yvonne McGill, EVP and CFO at Dell told me. Companies aren’t notified in advance when they’ve received approval for inclusion in the index, but Michael Dell, the company’s founder and CEO, was the first one to see the announcement when it was released and spread the news, McGill said.
“My team started working on a ‘we got added to the S&P 500’ note, and Michael beat us to it; he’s very engaged, and very fast,” she said. The tech giant was previously included in the S&P 500 before it went private in 2013. Dell resumed trading on the New York Stock Exchange in 2018.
“I think we are a remarkable example of a successful U.S.-based, multinational company that should be included in the S&P 500,” McGill said.
Dell, a Fortune 500 company, returns to the index following an over 75% gain in the stock over the past 12 months. The company has delivered $24 billion in adjusted free cash flow over the past five years, McGill said. After Dell completed the spin-off of VMWare in 2021, it had to work to get back to investment-grade ratings, she said. This time last year, Dell said it would return 80-plus percent of its adjusted free cash flow to shareholders, and “we've done that and more,” she said. It has returned over $9 billion to shareholders.
Dell’s evolution
McGill began her role as CFO in August 2023, but she joined Dell in 1997. I asked her thoughts on the direction of the company that was founded in 1984.
“We’re not the company we were 40 years ago,” she said. “I’m proud of how we continue to evolve."
McGill said she is excited about the core business—designing, developing, and selling PCs—as well as AI and that “extra opportunity that drives for us.” For example, Dell's AI-enabled server PowerEdge 9680, has accelerated development, with the second generation taking nine months instead of three years to develop, she said. PowerEdge 9680 is the company’s fastest-growing solution, and quickest to reach $1 billion.
Over the past year, Dell has sold over $6 billion in AI servers. In the company's Q2, AI orders were $3.2 billion up 23% from the prior quarter. And AI shipments were $3.1 billion, up over 80% quarter to quarter.
“We've really only been in this AI server business for about a year now, so I'm excited for next year because I'll start building more history,” McGill said.
Dell is also using AI internally in finance and accounting, like auto reconciling. And in customer service, the company is auto-resolving 80% or more of the issues that are coming in. Customer satisfaction rates are at about 85%, McGill said.
Looking ahead toward 2025, Dell is focused on continued growth in its core business with the PC refresh cycles, enterprise AI adoption, and reaching new heights with the AI server business, McGill said.
“We're doing things differently, and we will continue to evolve and grow and learn,” she said. Adding, “We're not 100% perfect, but we are doing very well."
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna
