Company Outlook
The company continues to focus on strategic priorities that will provide better value to customers while driving a more optimal balance of liquidity, profitability and growth. As the company executes against these priorities it will continue to incur costs as it restructures to improve productivity and execution, reduce headcount where appropriate, and invest in infrastructure and acquisitions. These actions, which the company believes are necessary to drive long-term sustainable value, may adversely impact the company's performance. In addition, the company's near term results could be adversely impacted by a slower decline in component costs and a seasonal shift in mix to U.S. consumer and international regions.
Strategy Update and Earnings Call
Dell will conduct a 90-minute conference call today, Nov. 29, at 3:30 p.m. CST, to discuss its long-term strategy and Q3 results. Mr. Dell, Mr. Carty and Steve Schuckenbrock, president of Global Services and Chief Information Officer, will provide an update focused on the company's key growth priorities.
Annual Meeting and Analyst Meeting Update
The Company's annual meeting of shareholders will be held Dec. 4, 2007, at the company's Round Rock, Texas, headquarters. The Company also plans to conduct an analyst meeting on April 2 and 3, 2008, in Round Rock, Texas.
About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell is a leading global systems and services company and No. 34 on the Fortune 500. For more information, visit www.dell.com, or to communicate directly with Dell via a variety of online channels, go to www.dell.com/conversations. To get Dell news direct, visit www.dell.com/RSS.
(1) Source: IDC Preliminary Top 10 Vendors, Worldwide PC Shipments, Third Quarter 2007 (Preliminary)
(2) Source: Forrester Research, Inc., How Enterprise Buyers Rate Their PC Suppliers And What It Means For Future Purchases. The State Of The Enterprise PC -- 2007 And Beyond. Ben Gray, November 12, 2007
Special Note
Statements in this press release that relate to future results and events (including statements about future financial and operating performance) are forward-looking statements based on Dell's current expectations. Actual results and events in future periods could differ materially from those projected in these forward-looking statements because of a number of risks and uncertainties including: general economic, business and industry conditions; our ability to maintain a cost advantage over our competitors; local economic and labor conditions, political instability, unexpected regulatory changes, trade protection measures, tax laws, copyright levies and fluctuations in foreign currency exchange rates; our ability to accurately predict product, customer and geographic sales mix and seasonal sales trends; information technology and manufacturing infrastructure failures; our ability to effectively manage periodic product transitions; any additional issues or matters that may arise from the ongoing SEC investigation; our ability to successfully remediate identified internal control deficiencies; our reliance on third-party suppliers for quality product components, including reliance on several single-source or limited-source suppliers; our ability to access the capital markets; litigation and governmental investigations or proceedings arising out of or related to accounting and financial reporting matters; our acquisition of other companies; our ability to properly manage the distribution of our products and services; effective hedging of our exposure to fluctuations in foreign currency exchange rates and interest rates; obtaining licenses to intellectual property developed by others on commercially reasonable and competitive terms; our ability to attract, retain and motivate key personnel; loss of government contracts; expiration of tax holidays or favorable tax rate structures; changing environmental laws; and the effect of armed hostilities, terrorism, natural disasters and public health issues. For a discussion of those and other factors affecting Dell's business and prospects, see Dell's periodic filings with the Securities and Exchange Commission.
DELL INC.
Condensed Consolidated Statement of Income and Related Financial
Highlights
(in millions, except per share data or as otherwise noted)
(unaudited)
Three Months Ended
---------------------------------
November 2, August 3, November 3, % Growth Rates
---------------------
2007 2007 2006 Sequential Yr. to Yr.
----------- --------- ----------- ---------------------
Net revenue $15,646 $14,776 $14,419 6% 9%
Cost of revenue 12,758 11,825 12,028 8% 6%
----------- --------- -----------
Gross
margin 2,888 2,951 2,391 (2%) 21%
Selling,
general
and
administrative 1,900 1,894 1,531 0% 24%
Research,
development
and
engineering 159 155 126 3% 27%
----------- --------- -----------
Total
operating
expenses 2,059 2,049 1,657 0% 24%
----------- --------- -----------
Operating
income 829 902 734 (8%) 13%
Investment and
other income,
net 107 96 66 11% 62%
----------- --------- -----------
Income before
income taxes 936 998 800 (6%) 17%
Income tax
provision 170 252 199 (33%) (14%)
----------- --------- -----------
Net income $766 $746 $601 3% 27%
=========== ========= ===========
Earnings per
common share:
Basic $0.34 $0.33 $0.27 3% 26%
=========== ========= ===========
Diluted $0.34 $0.33 $0.27 3% 26%
=========== ========= ===========
Weighted
average shares
outstanding:
Basic 2,236 2,237 2,229
Diluted 2,266 2,264 2,238
Percentage of
Total Net
Revenue:
---------------
Gross margin 18.5% 19.9% 16.6%
Selling,
general and
administrative 12.2% 12.8% 10.6%
Research,
development
and
engineering 1.0% 1.0% 0.9%
Operating
expenses 13.2% 13.8% 11.5%
Operating
income 5.3% 6.1% 5.1%
Income before
income taxes 6.0% 6.8% 5.6%
Net income 4.9% 5.1% 4.2%
Income tax rate 18.2% 25.3% 24.9%
Net Revenue by
Geographic
Region (in
billions):
---------------
Americas $9.7 $9.2 $9.2 5% 5%
Europe 3.8 3.5 3.4 10% 14%
Asia Pacific -
Japan 2.1 2.1 1.8 2% 18%
Percentage of
Total Net
Revenue:
---------------
Americas 62% 62% 64%
Europe 24% 24% 23%
Asia Pacific -
Japan 14% 14% 13%
Net Revenue by
Product
Category (in
billions):
---------------
Desktop PCs $4.8 $5.0 $4.8 (5%) (1%)
Mobility 4.7 3.9 3.9 22% 19%
Servers and
Networking 1.6 1.6 1.5 2% 8%
Storage 0.6 0.6 0.6 2% 8%
Enhanced
Services 1.4 1.3 1.3 6% 7%
Software and
Peripherals 2.5 2.4 2.3 6% 11%
Percentage of
Total Net
Revenue:
---------------
Desktop PCs 30% 34% 33%
Mobility 30% 26% 27%
Servers and
Networking 11% 11% 11%
Storage 4% 4% 4%
Enhanced
Services 9% 9% 9%
Software and
Peripherals 16% 16% 16%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
