Earnings

• 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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• 4Q Earnings – Making Progress Against Long-Term Priorities

  Fri. Mar. 07, 2008
  by Lynn A. Tyson, VP - Investor Relations

  All comparisons are year-over-year unless otherwise noted.

  Last Thursday, we announced our fiscal fourth quarter 2008 results; the replay of our conference call and a copy of our transcript can be found on the investor relations web site.  For the quarter we posted revenue growth of 10% on $16 billion in sales and 19% unit growth.  Operating income was $776M, or 4.9%.  EPS was $0.31 per share and cash flow from operations was $1.2 billion.

  For the full year, we grew revenue 6% to $61.1 billion, generated $3.4 billion of operating income, increased EPS 15% to $1.31 per share, and generated $3.9 billion in cash flow from operations.  Cash flow from operations grew faster than both net and operating income. 

  During the call we discussed our results, citing both regional and product highlights.  Then we placed particular emphasis on two areas - cost and growth initiatives.  Let me cover a few of the questions we are getting from investors.  Two key themes emerged.  They were costs and the pace of our progress against our key growth initiatives. 

  Our expenses have grown faster than revenue and we are out of cost position relative to peers in some product areas, price points and regions.  This was the result of our products and supply chain not being optimized to most efficiently provide customers what they value.  As stated, we have a multi-billion dollar opportunity to reduce costs over the next several years.   As described during our earnings call, we're working on multiple fronts to become more competitive.  We are recommitted to reducing our headcount, but headcount in and of itself is not the answer either.  Everything we do is being scrutinized.  This includes our supply chain, and at a deeper level it includes how we design our products.  You will see more activity towards improving our competitiveness in Q1, and this process will continue throughout the rest of the year.

  Second, Dell is taking action against several different priorities in parallel.  They are not meant to be sequential steps, but are step function changes to reignite our growth.  I hope you realize that we're building for the long-term.  Sometimes you need to make decisions for the short term that can adversely impact performance, but are absolutely the right for the long-term - as a result some of our actions won't be linear.  There have been a lot of moving parts as we integrate several acquisitions, work towards improving our sales force effectiveness and realign the rest of our organization against our key priorities.   Some of these changes take time, but the foundation is there and the changes are showing improvement.

  Examine the BRIC countries where our revenue grew faster than the industry up 36%, and units were up 50%.  And look at retail where we had no presence a year ago; we have already sold one million units worldwide and are at a one billion dollar revenue run rate.  And in notebooks we won 72% of the product awards applied for in this category.  We have an amazing brand that we are just now beginning to leverage in retail, globally or through the channel. 

  Michael said, "The acceleration in our growth is just a first step as we execute against the five priorities. We have a lot more to do to restore our competitiveness so that we can deliver long-term profitable growth."  There's more to come, and we look forward to updating you on all our priorities at our upcoming analyst meeting and hope to see you then. 

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• 3Q Earnings – Making Steady Progress to Long-Term Goals

  Thu. Nov. 29, 2007
  by Robert L. Williams, Director - Investor Relations

  Tonight, we announced the results from our fiscal third quarter and hosted our first conference call in over a year (a replay of the call and downloads of the financials & presentation can be found here).  Since wrapping up our investigation, this was our first opportunity to host an earnings call to discuss not only our most recent quarter's results, but the long-term strategy of our company

  Before getting into some of the details around our earnings, and consistent with this blog's purpose, I wanted to highlight the value and importance of listening to earnings calls - not just our own, but of any company's.  These calls provide investors and analysts (including individual shareholders to institutional investors, and sell-side brokerage analysts) one of the best ways to keep abreast of a company's performance and strategic priorities.   You are welcome to join ours or listen to the replay (here).

  As for our performance in the third quarter, the key takeaways were that we improved revenues, units, and profitability. We saw strength in our mobility products and continued to expand our business in international markets - particularly in Europe and Asia. We achieved $766 million in net income, generated roughly $1 billion in cash from operations, and drove our cash and investments balance up to $14.6 billion. This in particular is important because when we talk about creating value for our shareholders, cash generation is the ultimate litmus test, and essentially our goal is to maximize cash flows from operations over the long-term

  During the call, Michael Dell, Don Carty and Steve Schuckenbrock discussed our efforts and progress towards improving our current business, re-igniting growth, and building for the future. Here, we touched upon our new executive leadership team and global business groups, new XPS products and small business product line, and factory openings in Latin America and Eastern Europe. And with our recent acquisitions of Zing, Silverback, ASAP, and our planned acquisitions of EqualLogic and Everdream, you are seeing us expand our portfolio of products and services and position ourselves for long-term growth.

  Each specific business priority is part of the larger picture of business priorities that are being driven by our belief that information technology can be simplified and that we can drive long term shareholder value by focusing on growth in the consumer market, emerging countries, notebooks, solutions for the enterprise, and products and services for small to medium sized businesses. Our goal is to grow faster than the addressable opportunity in these areas, while keeping the company focused on driving strong cash flows from operations. These are more than ample growth opportunities for growth; the key will be to prioritize and execute.

  We feel 3Q's results highlight the progress we're making towards our strategic priorities and building for the future. We're making good progress towards these goals, but there's more to be done To be sure, the path of progress won't be completely linear, but that happens sometimes when you're building and investing for the future.

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