Wed. Jan. 09, 2008
Dell was at CES this week, showcasing a number of products that reflect our effort to reinvigorate our global consumer business through improved design and functionality; highlighted by our new Crystal LCD monitor, the all-in-one XPS One desktop, and redesigned Inspiron 1525 notebooks. Dell's IR team was at CES as well, meeting with investors and analysts, and answering questions on a broad range of subjects. The most common questions we received revolved around providing an update to our retail initiative, what impact retail would have on our cash conversion cycle (CCC), and what our thoughts were on the macro-economic environment? So, we thought this would be a good opportunity to address those topics in a blog post.
Since our last post on retail, Dell has forged partnerships with DSG International and Tesco to sell desktops and notebooks throughout Europe. When combined with some of the partnerships we've established in the U.S. (Best Buy, Staples, Wal-Mart), Europe (Carphone Warehouse), Asia Pacific (Gome and Bic Camera), and Latin America (Ponto Frio), we've clearly made good progress in penetrating a number of retail markets, but we still have a lot of work to do this year.
As Michael described during our November strategy call, our goal is to secure 1-2 retail partnerships in the top 20 markets by the end of the year. With each market, we will evaluate what products are appropriate and play best to our partner's audience. What you can expect is that within each region, we will partner with industry leaders that play to one of three categories: mass merchandising, consumer electronics, and home office. For example, in the U.S., we've partnered with Wal-Mart, Best Buy, and Staples respectively.
On the topics of CCC, we previously blogged that we don't expect our sales through the retail channel will have a significant impact on our negative cash conversion cycle (which remained strong in Q3 at -35 days). There is likely to be some relative impact, but CCC should remain significantly negative and advantageous for Dell. Dell's world-class manufacturing and supply chain capabilities, coupled with high-velocity partners, will help minimize the impact on DSI while the impact to DSO should be minimal as retailers' accounts receivables will be similar to our existing commercial customers.
Finally, regarding a potential macro-economic slowdown and its impact on Dell's business; as a rule, we don't comment on our performance on an intra-quarter basis. Dell remains focused on long-term growth in its key initiatives (consumer, emerging markets, mobility, SMB, and enterprise), strong cash flow generation, and sustainable value creation for our shareholders over the next 3-5 years.