Dell Shares

Dell’s Virtualization Strategy

Lynn A. Tyson, VP - Investor Relations — Thu, 26 Jun 2008 04:26:00 GMT

As I had previewed during our Q1 earnings call last month, I recently sat down with Brad Anderson, SVP and head of our Enterprise business, to get some more insight into our virtualization strategy, how it relates to our Server and Storage business, and virtualization's impact on the industry and Dell. Simply put, our mission at Dell is to Simplify IT by eliminating complexity in customer computing environments. There are a number of ways we are doing this - and virtualization is a critical enabler.

Virtualization has been growing rapidly because it solves real customer problems related to space, cost, and power. One of the things to keep in mind is that dynamic virtualized server environments work best when matched with an equally dynamic storage solution and that's why storage virtualization is of equal importance. In addition, you may also be interested in a host of virtualization related topics on Direct2Dell, our blog site for customers, which might further augment the v-log that follows.

We hope you find this discussion helpful. The vlog format is a new way for us to have a conversation with you and we look forward to your feedback. We have included a few supporting slides in PDF format in conjunction with the vlog that you can download or print. As always, we will respond to your questions and comments posted on this blog site as well as via email and over the phone. So please feel free to post on this site or contact us directly. We look forward to hearing from you!

Click here to view the PDF file associated with the vlog.

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Opportunities for Individual Investors to meet with Dell IR

Robert L. Williams, Director - Investor Relations — Fri, 20 Jun 2008 17:20:00 GMT

Starting today and through this weekend, we are attending the Better Investing National Convention in Schaumburg, Illinois - one of several conferences from the National Association of Investors Corporation (NAIC) that cater to individual investors. The conference is set up as a means for individual investors to learn best practices for investing and more about financial planning. The conference hosts classes, seminars and conversations with investor relations professionals from exhibitors and corporate sponsors.

So why are we there you ask? Individual investors own roughly 20% of Dell and this is one of many opportunities for us to be involved in direct relationships with you, our current and potential shareholders. This conference is yet another way to interact with company representatives, educate yourself and become informed and knowledgeable about us and other companies. We will also be attending other conferences such as the Money Show in Washington DC, November 6-8, 2008 and The World Money Show in Orlando, FL, February 4-7, 2009. Moreover, we look forward to seeing our stockholders at the 2008 Annual Meeting of Stockholders that will take place on July 18^th here in Austin, Texas.

We'll be at the Renaissance Hotel in Schaumburg, Illinois. Come see us at booth #214 - we hope to see you there.

Notice and Access and Interactive Year-in-Review

Robert L. Williams, Director - Investor Relations — Wed, 04 Jun 2008 15:31:00 GMT

In preparation of our upcoming Annual Meeting of Stockholders on July 18^th in Austin, we filed our proxy documents this week and began mailing ‘notice’ to shareholders. In the past, we mailed shareholders paper documents, including an annual report, proxy statement and voting instructions. As a result of a U.S. Securities and Exchange Commission e-proxy rule, public companies are now allowed to provide their proxy materials over the Internet, which is commonly referred to as ‘notice and access.’

So what’s different this year? The e-proxy rule requires us to mail a ‘notice’ to shareholders. This ‘notice’ provides instructions on how to ‘access’ proxy materials and related company information over the Internet, as well an option to continue receiving a paper copy of the proxy statement, annual report and voting instruction card. We believe that this new process is important – it will conserve natural resources and reduce the costs of printing and distributing proxy materials. Since we must provide this filing at least 40 days before the shareholders’ meeting, it will also provide shareholders with immediate access to the information they should review.

Why are we blogging about it now? It’s a big change and we wanted to make the transition as easy as possible. We filed our proxy statement on Monday, June 2^nd and will begin mailing ‘notices’ to you this Friday, June 6^th. Once you receive your notice in the mail, you can access the voting page online, where you will find: the proxy statement, our annual report on form10-K, a link to our 2008 interactive year-in-review website and information on the time and location of our annual meeting of stockholders.

In coordination with the online voting migration, we have re-designed our 2008 interactive year-in-review website that includes our chairman’s letter, a video from Michael, a synopsis of our key growth priorities, financial summary charts and easy-to-print PDF’s of all of the material on the site. Additionally, we have included easy to access links to our shareholder meeting webpage and the proxy voting website for your convenience. We encourage you to review the interactive review online and provide feedback on how you like the new format.

Proxy voting is an important means by which you as an investor can have a say in the business operations and activities of Dell. Whether you plan to attend our annual meeting on July 18^th or not, we value your opinion and your vote. Shareholder feedback enables us to serve you better. We’re listening.

1Q Earnings – Growing at a Premium to the Industry

Robert L. Williams, Director - Investor Relations — Thu, 29 May 2008 15:18:00 GMT

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.

Dell Announces New CFO

Lynn A. Tyson, VP - Investor Relations — Mon, 19 May 2008 11:59:00 GMT

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.

Dell's Services Strategy

Lynn A. Tyson, VP - Investor Relations — Tue, 13 May 2008 18:27:00 GMT

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.

DellShares Discusses Sustainability at Dell

Tod Arbogast, Director - Sustainable Business — Thu, 08 May 2008 21:33:00 GMT

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.

Dell Completes MessageOne Acquisition

Dell IR — Thu, 24 Apr 2008 15:35:00 GMT

Dell today announced the completion of its $155 million acquisition of MessageOne. Steve Schuckenbrock, SVP and President, Global Services and CIO, wrote a blog covering today's close of MessageOne and its context within a broader services strategy. In the post, Steve discusses our move towards a SaaS-enable services delivery platform, how Dell is simplifying IT infrastructure, and how customers may configure support levels to what they need through ProSupport. Steve's post can be found on Inside IT, and our original post on MessageOne can be found Dell Shares.

Dell Issues Private Placement Debt

Lynn A. Tyson, VP - Investor Relations — Thu, 17 Apr 2008 19:29:00 GMT

Today we settled three tranches of debt (see 8k filing) that we issued earlier this week in private placement transactions: $600 million at 4.7% yield due April 15, 2013; $500 million at 5.65% yield due April 15, 2018; and $400 million at 6.5% yield due April 15, 2038. This debt is considered "investment grade" by various rating agencies - for example it is rated A2 - Stable by Moody's.

As we discussed in our FY 2008 10K, filed on March 31, 2008, we use cash generated by operations as our primary source of liquidity and believe this cash is enough to support our business operations. In FY 2008 we generated $3.9 billion in cash flow from operations, accessed $5.3bn in cash form a subsidiary outside of the United States, spent $4 billion on share repurchase, $2.2 billion on acquisitions and $831million on capital expenditures. We ended the year with $9.5 billion in cash and investments.

Like many multi-national companies, a substantial amount of our cash balances are held outside of the U.S. and so like other companies we have chosen to access the capital markets to supplement our liquidity in the United States - which means raise debt. The last time Dell raised long term debt was in 1998.

We plan to use the funds we raised this week for general corporate purposes - which includes discretionary spending like share repurchase and acquisitions. Share repurchase remains our primary use of cash. Dell believes this is good for Dell and for our shareholders because it lowers our weighted average cost of capital enhancing our current capital structure.

We do plan on exchanging the debt we raised this week for public debt later this year.

Dell Equity Analyst Meeting - Day 2

Robert L. Williams, Director - Investor Relations — Thu, 03 Apr 2008 17:38:00 GMT

The second and final day of our equity analyst meeting featured presentations by Michael Dell, Chairman of the Board and CEO, and Don Carty, Vice Chairman and CFO.

Right up front, Michael addressed Dell's ability to execute. He made it clear that Dell is making progress on transforming the company and we are seeing evidence in our recent growth, yet we still have to move faster on costs. There are no longer any fixed costs within Dell - essentially everything is variable right now. We have a $3 billion cost opportunity and we're taking aggressive actions to restore our competitive advantage. We believe operating expense will be down as a percentage of revenue this year. We also want to deliver a unit growth premium to the industry - this was the case in Q4, and it looks like it is continuing in Q1.

Don Carty spoke about Dell's financial heritage - one built on striking the optimal balance between liquidity, profitability and growth. He said that Dell's execution against these priorities hasn't been up to our standards or your expectations. Dell is strengthening its competitive position and improving profitability by reducing total costs in three ways. First, we will reduce operating expense, including headcount and compensation. Second, we will reduce product and procurement costs by designing for price segments and removing features that are not valued by our customers. Finally, we will reduce manufacturing and logistics costs by optimizing our global manufacturing network.

Later in the morning, other senior executives hosted panel discussions on our five key growth initiatives.

Steve Felice, SVP and President of Dell Asia/PAC, reviewed our strategy in emerging countries. Emerging countries represent 85% of the world's population, 30% of worldwide GDP, more than 50% of the worldwide GDP growth... and are a significant opportunity for Dell. In the IT hardware space, the next billion customers will come from emerging countries. By 2012, these countries will make up 38% of the world's PC shipments, up from 11% in 1996 (per IDC and Dell estimates).

Dell is tailoring its products, services and engagement models in these countries to help ensure our place in this tremendous growth opportunity. In India and Brazil, for example, we largely work directly with customers. China is closer to a 50/50 split between direct and the channel, while Russia is predominantly channel focused. We complement these approaches with specific products and services tailored to the needs of customers in those countries.

Dave Marmonti, SVP and President of Dell EMEA, then discussed what we're doing in small and medium enterprises (SME). Within our SME initiative, we have four global sub-initiatives that will drive our growth: sub-segmentation, customer relationship management, IT-as-a-service and a flexible global channel strategy. Ultimately, we'll bring differentiated products and capabilities to SMEs who just want to focus on their business, not their IT.

Ron Garriques, President of Dell's Global Consumer Group, said that his goal is simple and straightforward - grow faster than the industry and do so profitably with a great cash conversion cycle. We get there by getting to the point where COGS and operating expense is competitive and best in class; and by innovating our products and services in order to delight customers independent of the channel they buy through. Growing the profitability of this business is the number one priority.

Jeff Clarke, SVP of Dell's Business Client Product Group, covered our growth strategy in notebooks. In a nutshell, Dell will deliver more segment-specific products for consumers, SMEs and customers in emerging countries, while being cost competitive across all price bands and channels.

Finally, Brad Anderson, SVP of Dell‘s Business Enterprise Product Group, talked about what we're doing in enterprise. Last year, $289 billion was spent on enterprise-related IT. Dell's share was a mere 4.4 percent of that. We get a significant share of total server revenue, but we're under-represented in the other categories of spend - storage, systems management, professional services and support services, etc. So we're creating solutions for customers' greatest challenges. We'll simplify IT with differentiated, industry-leading solutions, including blades, power & cooling, virtualization, iSCSI storage and cloud computing.

Each of these growth priorities implies there are significant opportunities ahead for Dell. Our growth in every instance won't be linear, but taken together they represent a thoughtful vision of our industry, the problems and solutions we're tackling, and the white space we're addressing. It's clearly up to us to drive the right cost model to enhance our competitive position.

Again, if you haven't already seen the webcast or presentation, I encourage you to watch a replay of them here.

Dell Equity Analyst Meeting – Day 1

Robert L. Williams, Director - Investor Relations — Wed, 02 Apr 2008 18:40:00 GMT

Today, 250 equity analysts and institutional investors joined us in Round Rock for Dell's equity analyst meeting. These meetings, which are available via live webcast, serve two important purposes. First, they give this audience and all of you an opportunity to hear directly from Dell's senior leadership, and second, it's our chance to help you understand where we're going financially, share our key initiatives and address questions and concerns.

The meetings and briefings are spread over two days, with the first day being a prerequisite to discussing our growth priorities on day two. We spent the first day providing a framework by which investors could understand the fundamental changes we're making to Dell's business model - from manufacturing to channels to services.

Dell has always been known for its direct model. With it, we created a direct customer relationship model and build-to-order manufacturing capability like the world had never seen. Our assets were global and our cycle times were some of the shortest in the industry.

But today's PC economics are much different. Moore's law led to better performance, rapid growth and lower selling prices, ultimately leading to smaller absolute cost advantages. And growth shifted from desktops to notebooks and from large enterprise customers to consumers and small enterprises. Our customers are more diverse than ever before. We now need to serve them in very different ways.

Mike Cannon, President of Dell Global Operations, talked about how Dell is optimizing its global manufacturing network to better meet customer needs. By matching product design to customer segments, we're able to eliminate embedded product costs. Getting this part right actually enables us to think more broadly about our manufacturing model and enhance the value we provide our customers.

Many have also questioned how being direct works with channel. The reality is that we have a $10 billion global partner business that we've steadily built for 23 years. Paul Bell, SVP & President of Dell Americas, spoke to our channel strategy and the investments we're making to better work with VARs and systems integrators. The flexible engagement model we've developed is backed by a compelling value proposition for our partners: our strong brand; a broad portfolio of industry-leading products; and simple, beneficial terms. It's designed to minimize conflict while building trust and mutually beneficial relationships. Since we announced this new initiative in Q3, we've worked hard to bring our regional partners onboard to make our solutions available in the geographies that need them most.

Steve Schuckenbrock, SVP Global Services & CIO, spoke about how customers spend a massive share of their IT budgets on services and how they face a burning need to shift this spend from maintenance to innovation. We approach services very differently from our competitors. We believe services should be customizable, a la carte, and available remotely. So Dell's new services model combines disruptive technologies with our core strengths to provide customers convenient and affordable enterprise-class support and monitoring services. Through ProSupport and the assets we acquired through several acquisitions we are building a platform that allows us to remotely manage the client lifecycle. We let customers choose which services they want and when they want them. And we provide solutions where consultants are available - but not required. We have a $6.2 billion global services business today, and there is no reason it can't double over the next 3-4 years.

These are changes in the way Dell interacts with customer. They set a foundation upon which we'll build our future success.

If you haven't already seen the webcasts or presentations, I encourage you to watch a replay of them here.

Dell Driving Actions to Enhance Competitiveness and Optimize Operations

Lynn A. Tyson, VP - Investor Relations — Mon, 31 Mar 2008 17:12:00 GMT

I know that sounds like a mouthful, so let me take a few minutes to discuss what we announced today. In May of last year, we announced we were taking steps to improve the competiveness of our operating model, profitability and cash flow. Restoring competitive advantage means fixing things in our business that will allow us to provide even more value to our customers - and investing in things that will allow us to deliver better and more products and services to our customers around the world.

Improving profitability means just that and this can be achieved by improving our cost position which is embedded in cost of goods sold (COGS) - like designing products that have the right features for our customers - things they want and value. Operating expenses (Opex) is also a part of profitability and we believe we can do a better job of managing these expenses - things like reducing headcount (net of acquisitions) and moving more of our people to front line positions - positions that actually touch the customer. And when you generate profits - cash flow follows. At least this is the case for Dell. On an annualized basis we typically generate operating free cash flow in excess of net income - so the more net income we generate - the more cash we generate. And at the end of the day it's cash that fuels shareholder value.

So in our press release we said we believe we have a $3 billion opportunity to reduce total costs - this includes both COGS and Opex. Now this does not happen over night. In fact we said we believe it will take three years to achieve an annualized savings of $3 billion. This means that before you adjust for growth, we believe our costs at the end of our fiscal 2011 will be $3 billion lower than at the end of fiscal 2008. A company can do several things with this benefit. They can use it to strengthen their competitive position and invest back into their business which helps drive growth, they can use it to improve profitability, or they can do both. We will use it for both - and the split will depend on a variety of things including marketplace dynamics and our growth initiatives.

In our release we also announced that we will be closing our desktop manufacturing in Austin, Texas. Over the last three years, driven by the massive shift in customer preference for notebooks - especially among consumers, industry forecasts for the rate of growth of desktops have declined from 10.8 percent to 3.6 percent. And the desktop to notebook mix in the U.S. has declined from a 70/30 split in 2005 in favor of desktops to a 50/50 split today. Our fiscal fourth quarter of last year reflects this change as we grew notebook units year over year by 37 percent and desktops by 10 percent.

Lastly - in our release we announced we would undertake a strategic assessment of ownership and operating structure alternatives for our Dell Financial Services financing activities. And that this assessment will primarily focus on the consumer and small/medium business aspect of this business. We acquired the remaining 30 percent of DFS from our partner, CIT, in December of last year.

There is a lot of concern out there right now about the credit markets and we've been getting a lot of questions so let me clarify two things relative to Dell.

First, our assessment of our DFS business is unrelated to what is going on right now in the credit markets - we completed the acquisition and so the natural next step is to pursue our strategy, simple as that. Many companies - GE and Target - to cite recent examples - often assess the ownership structure of their financing companies. In our case we are primarily evaluating three key things: (1) can DFS provide even better and most robust product offerings to our customers, (2) can we accelerate the investments we are making in DFS and, (3) are there more efficient ways to fund DFS. Our assessment may result in no change, or a sale to or partnership with a fully dedicated financing company.

Second, relative to our consumer financing receivables - less than 20 percent of our net customer receivables - or $1.6 billion - were to subprime customers. This percentage is similar to what it was in our fiscal third quarter. Based on our assessment of these customers financing receivables and the associated risks, we believe we are adequately reserved. If you are interested in this topic I encourage you to read Note 2 Financial Instruments, and Note 6 Financial Services of our Fiscal 2008 10K that we filed today.

To get an update on all of the initiatives we have underway at Dell - I encourage you to listen to our equity analyst meeting which will be held in Round Rock, Texas on Wednesday April 2^nd and Thursday April 3^rd. You can reach the web cast and accompanying slides via this link: Dell Analyst Meeting. If you can't listen right away - it will be up on our web site for a while.

4Q Earnings – Making Progress Against Long-Term Priorities

Lynn A. Tyson, VP - Investor Relations — Fri, 07 Mar 2008 23:20:00 GMT

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.

PartnerDirect Expands to EMEA

Lynn A. Tyson, VP - Investor Relations — Fri, 15 Feb 2008 13:15:00 GMT

When you look at the world and see that the number of people online will double from 1 to 2 billion in a few years, it makes a compelling case for understanding where this growth is coming from and how well your company is positioned to take advantage of it. According to data from the International Monetary Fund, in 2007, emerging economies like China, India, Brazil, Mexico, Russia, South Africa, and others accounted for nearly 30% of global GDP and almost 50% of global GDP growth. Today this trend is only accelerating. At Dell, Emerging Countries is one of our Big 5 strategic priorities and we are reexamining everything we do there. One thing is becoming clear, to be successful in this space you must enable the success of your channel partners, who in most cases have the established infrastructure and brand to reach these customers.

This week, we announced that our PartnerDirect program, which we launched in the U.S. in December, is now available in Europe, the Middle East, and Africa. Despite our roots as a "Direct" company, Dell has more than 30,000 global partners around the world who generated approximately $9 billion in Dell run-rate revenue in the past year alone. With the expansion of PartnerDirect in EMEA, we thought it would it would be a good opportunity to further discuss Dell's global commercial channel strategy, how it supports several of Dell's business priorities, and the impact the channel will have on Dell's growth strategy-including emerging countries.

As a quick recap, PartnerDirect was launched in the U.S. in December. It comes as the result of feedback from thousands of solution providers and VARs who told us how exactly they wanted Dell to help them. Dell listened and developed a new set of tools and services exclusively designed to make it easier for our channel partners to work with Dell and be more successful. For starters, the program creates a new web portal dedicated to our partners--www.dell.com/partner. And for the first time, Dell is providing a partner logo for certain types of joint marketing activities. PartnerDirect also provides 100-percent dedicated sales and customer care and opens new vehicles for credit financing.

Also PartnerDirect provides a clear mechanism for Deal registration. Dell is committed to minimizing channel conflict. Speaking to CRN last week, Michael put it best when he said, "Let's say you're a Dell/EqualLogic partner, and you recognize an opportunity inside your customer, and you register that opportunity-so far, roughly 90 percent of the opportunities that have been requested to be registered have been accepted-so you register this opportunity. Our sales reps are compensated the same whether it's sold through a channel partner or it's sold direct. So they have no incentive not to work with the channel, and in fact every incentive to work with the channel."

To get some more insight into how PartnerDirect is being implemented, I recently sat down with Greg Davis, Dell's Vice President & General Manager of the Americas Channel Group; Josh Claman, Vice President & General Manager of Dell Channels in EMEA; and Pim Dale, Vice President & General Manager of Emerging Markets in EMEA. In the vlog, this team describes Dell's existing partnerships in emerging countries, the size and scoping of channel activities in EMEA, and Dell's current penetration rate through the channel and what it hopes to achieve over the next few years.

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Duration: 7:38

Dell’s Planned Acquisition of MessageOne

Lynn A. Tyson, VP - Investor Relations — Tue, 12 Feb 2008 12:30:00 GMT

E-mail has become one of the most ubiquitous and critical applications in business today; it can impact revenue, productivity, and a company's reputation. Due to increased regulatory and business requirements, e-mail management--including measures for compliance and disaster recovery--is now more complex than ever. Our announcement today to acquire MessageOne, an industry leader in Software-as-a-Service (SaaS) enabled e-mail continuity, compliance, archiving, and disaster recovery services is an important step towards simplifying IT and restoring integrity around a vital piece of our customer's IT infrastructure.

Dell's customers have been looking for solutions to help them simplify their IT infrastructure. Legacy services masks IT complexity. Estimates show that for every 1 dollar spent on hardware and software another 3 dollars gets spent on consultants and integrators. This is where we believe there is room to fundamentally change the industry's infrastructure services model. Through the use of technology, Dell's supply chain advantages, remote infrastructure management and SaaS, Dell is pursuing a strategy in the services space that is analogous to the approach taken to simplify the hardware business 23 short years ago. We have a legacy of driving down the cost of hardware for our customers and they believe we can do this in services as well.

MessageOne is another key piece in expanding Dell's services, especially in the rapidly growing SaaS enabled managed services market and complements our recent SaaS acquisitions of Silverback Technologies and Everdream we completed late last year. Silverback provides leadership in event-based monitoring and remote management of different Enterprise assets (servers, storage, printers, routers, etc). Everdream extends this capability to include lifecycle management of client assets (notebooks and desktops). These moves also signal Dell's efforts to address the needs of the small and medium business (SMB) market, similar to our purchase of EqualLogic late last year. EqualLogic is aimed at Dell's drive to Simplify IT and virtualization for mid-sized enterprise customers through Dell's channel partners and direct channel. EqualLogic has the third largest sales of iSCSI SANs and has patented storage virtualization technology that will give customers the power to cost-effectively install, expand and modify their data storage resources. We will build upon the portfolio of existing customers and channel partners for all of these offerings and will incorporate the respective technologies into future Dell services, including Dell's new ProSupport offering announced earlier this month.

We think ProSupport is especially exciting because it is more than another service offering, it is a choice of comprehensive support solutions that offer customers a choice based on who they are, how they use technology and where they want to allocate scarce IT resources. Dell ProSupport is breaking the "one size fits all, fragmented" support model that is industry standard, by putting choice in the hands of customers. This global offering spans all areas of hardware and will enable commercial customers, including small and medium business, to obtain world-class service from Dell or our registered solution providers without paying for more or less than they need.

Acquisitions for Dell are not a strategy unto themselves - they are a part of an overall strategy to fuel growth in five key areas: Consumer, Emerging Markets, Notebooks, Enterprise and Small Medium Business. When assessing possible acquisitions we look at several things including strategic fit - or how does it drive growth by scaling through our customer base, give us access to channels or provide new tools. We also look at how it can fit into our business model, how easily we can integrate the business, and also the track record of the management team. Via organic growth and acquisitions we will fill key capability gaps, gain access to new channels and leverage key technologies across our broad global customer base. You will continue to see Dell pursuing opportunities that strengthen our ability to meet the increasingly changing needs and challenges faced by many of our customers and simplify their IT environments.

One thing unique about this transaction is that it involved related parties. MessageOne was co-founded by Adam Dell, Michael Dell's brother, and is owned in part by two venture funds managed by Adam Dell--Impact Venture Partners and Impact Entrepreneurs Fund. Michael Dell, Susan Dell, a trust for the Dell’s minor children, and Mr. Dell’s parents are investors in both funds. Michael was not involved in the negotiation or decision-making process, and the independent members of Dell's board of directors (excluding Michael and Don Carty) analyzed in detail management's decision process to ensure that management was acting independently and in the best interests of the company and its shareholders. Additionally, Dell's board received an opinion from Morgan Stanley & Co. Incorporated concluding that, as of the date the deal was signed and based upon and subject to the matters stated in the opinion, the consideration to be paid by Dell pursuant to the acquisition was fair from a financial point of view to the company. Based on all of that, our independent directors concluded that the transaction was fair to, and in the best interests of, the company and its shareholders and approved the transaction. Michael and Susan Dell have indicated that the proceeds which they and their children’s trust receive from the acquisition will be donated to charity.