May 2008 - Posts

• 1Q Earnings – Growing at a Premium to the Industry

  Thu. May. 29, 2008
  by Robert L. Williams, Director - Investor Relations

  All comparisons are year-over-year unless otherwise noted. Industry growth rates exclude Dell.

  We announced Q1 results today.  Revenue was up 9% to $16.1 billion on 22% unit growth.  EPS were up 12% to $0.38 per share and cash from operations was $143 million and $4.2 billion on a trailing four quarters basis.  We encourage investors to read the full press release and earnings presentation; and listen to a replay of our conference call that can be found on the investor relations web site after the earnings call. 

  A year ago we made a conscious decision to reignite growth, and our results this quarter demonstrate we're making progress.  For the first time in several quarters, Dell is growing faster than the industry in all major product categories and regions.  In the U.S. we grew 16% vs. flat industry growth.  In APJ we grew 43% vs. industry growth of 14%.  BRIC revenues were up 58% on a 73% increase in units.  And, Global Consumer revenues were up 20% and units were up 47% as we continue to move into retail.  These results reflect the strength of the Dell brand worldwide, and our ability to deliver the products customers want in the regions where they live and the places where they shop.

  These are solid growth numbers in areas that matter and they are important first steps to driving competitiveness in our business.  Revenues and share are growing, enabling us to better scale operating expenses and deliver sustained earnings performance.  A year ago we made the decision to eliminate redundancies and better align our operating expenses, and last quarter we made a commitment to reduce total costs by $3 billion.  Here too we're making headway.  Our operating expenses are down 7% sequentially, headcount is down 7,000 year-over-year not including acquisitions, and profitability in Global Consumer improved significantly.  These are signs of tangible progress and we're confident this trend will continue. 

  This quarter, you will also notice we changed our reporting structure to completely break out Global Consumer from each one of the regions.  We are now reporting four operating segments, Americas Commercial, EMEA Commercial, APJ Commercial, and Global Consumer and we are providing five quarters of historical data for each segment.

  Finally, on the earnings call today we will be introducing our new CFO, Brian Gladden, to the broader investment community.  A 20 year GE veteran and formerly CEO of SABIC Innovative Plastics, we're happy to have Brian join our team.

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• Dell Announces New CFO

  Mon. May. 19, 2008
  by Lynn A. Tyson, VP - Investor Relations

  Today we announced that Brian Gladden will be joining Dell as Senior Vice President on May 20^th and he will assume the role of CFO on June 13.  Brian will succeed Don Carty, who has made a lasting positive impact on Dell's financial organization since stepping in as our CFO in early 2007. Don will remain on our board of directors continuing his long contribution to Dell.  Brian will be responsible for all aspects of Dell's finance function including accounting, financial planning and analysis, tax, treasury, audit, and investor relations.

  Brian brings a wealth of experience to Dell as an operationally focused CFO who adds further experience with globally scaled companies to one of the deepest management benches in the industry. Brian joins us from SABIC Innovative Plastics Holding BV, formerly GE Plastics, where he was President and CEO of among the world's largest producers of high-performance polymers used by electronics, office equipment, computer, and automotive manufacturers. 

  His responsibilities at SABIC spanned a global organization with revenues of $7 billion and some 10,000 employees operating 60 manufacturing and technology facilities in 20 countries. Brian's previous experience includes nearly 20 years with General Electric (GE) in a variety of financial and management roles. He served as Vice President and General Manager of GE Plastics' resin business; CFO of GE Plastics; and, Vice President and CFO of GE Medical Systems Healthcare IT business during his career with the company.  He was named a GE corporate officer while CFO of GE Plastics and had formerly served for five years as part of  GE's corporate audit staff.

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• Dell's Services Strategy

  Tue. May. 13, 2008
  by Lynn A. Tyson, VP - Investor Relations

  We have been getting a lot of calls and questions today.  Many are wondering about Dell's services strategy, especially in light of the news in the tech industry today. In fact, many of our customers enjoy the benefits of the partnership between Dell and EDS and we look forward to meeting their needs well into the future.

  Customers value flexibility, value, configurability, access to innovation and control - this deal is likely to reduce all five for affected customers and perpetuate an old model. We believe the Services Industry is at a key inflection point. Dell will lead the transition to Configurable Managed Services, giving customers access to the best innovations in the world through remote infrastructure management and Software-as-a-Service (SaaS) offerings. By doing so, we will Simplify IT and give customers control, choice, flexibility and the best value in systems and services. 

  Dell's strategy was recently discussed by Steve Schuckenbrock over at our Inside IT blog.  He noted "Dell will continue building out our plan to dramatically simplify IT infrastructure services and give companies choice and flexibility in how they purchase and manage services. Our goal is to improve the price/performance of infrastructure services to save companies millions -- potentially billions-- of dollars for IT that will grow business and improve competitiveness." For more information, you can see Steve's Services deck from our Equity Analyst Meeting in April.

  For example, our recent acquisitions of MessageOne,  SilverBack, Everdream and ASAP Software are building a SaaS-enabled services delivery platform to remotely monitor, manage and troubleshoot routine IT infrastructure issues such as patch management, anti-virus, asset tracking and software license management.

  The Dell approach to consulting services is to use innovative tools and automated discovery agents and technology based analysis and profiling-- instead of armies of consultants-- to virtualize and improve data center power consumption, simplify storage and improve end-user computing, systems management and network security.

  Our new ProSupport service is also customizable, letting customers configure their support by speed of response, level of protection and pro-active vs. reactive services that meet their needs. 

  In each of these cases, Dell services break from standard industry practices.  We are building out Dell's services to be configurable and subscription based so customers can start or stop a service or any combination of services at any time, in just one click.

  Delivering services that simplify IT is where businesses today derive more value, choice and flexibility.  That is crucial to how businesses purchase and manage their information technology. 

  Dell is bringing to market a fundamentally different services offering than that which has been offered for the last decade or so.  As a result, we are also delivering a very different value from "outsourcing"  and pure play consulting.  We believe our approach will prevent many of the issues that challenge businesses of all sizes, and in true Dell fashion, offer customizable IT services that meet specific business needs and give customers control, choice, flexibility and the best value in simplifying IT.

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• DellShares Discusses Sustainability at Dell

  Thu. May. 08, 2008
  by Tod Arbogast, Director - Sustainable Business

  HBS Professor, Nitin Nohria once said "communication is the real work of leadership."  This has never been more true at Dell than right now.  We launched DellShares with a commitment to reach out to our institutional and retail investors to discuss items relevant to our strategy, our financial results, and progress on our initiatives.  An important part of this progress is communicating Dell's commitment to sustainability. 

  As we write our 2008 annual sustainability report and reflect on our progress, we want to reach out to all stakeholders, and in particular socially responsible investors.  SRI funds now represent over 10% of the $25 trillion U.S. equity market, and this trend is only growing.  Through DellShares, we hope you will join us for a quarterly dialogue on Dell's progress on corporate governance, environment responsibility or community engagement - these are topics of interest to all of us.

  Sustainability is a multi-year journey for us so it is difficult to capture everything we do in one report.  Many of our programs go back five years or more and are only now coming to fruition.  However, we believe communication is the key - through DellShares we'll address a different topic every quarter.  This quarter we'll focus on Dell's environmental responsibility efforts.

  Dell started with a focus on the Environment.  In fact, our first "Sustainability Report" in 1998 was really an "Environment Report."  Because the environment is most closely tied to our core business, it is where we have made the most public commitments.  Michael pledged last year that we would be carbon neutral by the end of 2008 and that Dell would be the "Greenest Technology Company on the Planet." 

  Those are big commitments, but they were not new.  We had been working towards those for years.  Our products met lead-free requirements ahead of legislation and we are currently working on removing remaining traces of non-regulated BFRs and PVCs.  We are a leader in global product recovery and recycling.  Our products deliver maximum performance per watt.  Our catalogs had over 50% post consumer recycled content and we reduced customer waste by redesigning our product packaging. 

  We also publically report our Greenhouse Gas emissions, lead our industry in operational efficiency, are committed to carbon neutrality and have recently announced that our corporate offices in Round Rock, Texas will be supported by 100% renewable energy.  Dell also reports on our waste that is being recycled, reused and landfilled.  In fact, we currently recycle over 94% of our own waste from manufacturing with public a goal to avoid 99% by 2012. 

  In fiscal 2008, we launched ReGeneration.org, a global community of people who are concerned about the environment.  This site provides a place to network and learn about ways to reduce your impact on the environment.  We invite you to join the ReGeneration!

  The leadership for initiatives like these start from the top at Dell.  We have a Sustainability Council that includes Michael as well as representation from Finance, Legal, Procurement, Marketing, Sales, Investor Relations, HR, Engineering and other groups.  The Sustainability Councils reports progress and results to the Governance and Nominating Committee of the Board of Directors, who in turn, share their council.  This direct engagement enables progress across all areas of sustainable business practices. 

  These are a small portion of achievements we have covered in our Sustainability report.  I encourage you to read our 2007 Sustainability report for more details and look for our 2008 Sustainability report coming in Q2.  We look forward to your comments, and we hope this becomes fruitful dialogue.

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