Dell’s Business Priorities Drive Revenue Up 10 Percent in Fourth Quarter

(Auszug aus der Pressemitteilung)

Round Rock, Texas, February 28, 2008 – Dell today reported results for its fourth quarter of fiscal year 2008, with revenue up 10 percent year-over-year to $16 billion, unit growth of 19 percent, operating income of $776 million and earnings per share of $0.31. Revenue for the full fiscal year was $61.1 billion, an increase of 6 percent year-over-year and earnings per share grew 15 percent to $1.31.

Cash from operations totaled $1.2 billion, while cash and marketable securities at the end of the quarter were $9.5 billion. Dell resumed its share-repurchase program during the quarter, and spent $4 billion to repurchase 179 million shares of common stock. In the first quarter of fiscal 2009 the company expects to spend at least $1 billion to repurchase its shares.

“Execution against our priorities continues to drive growth,” said Michael Dell, chairman and CEO. “As businesses and consumers worldwide join the Connected Age – one that’s underscored by more data, more devices and more users – we see enormous opportunities to enable them to Simplify IT and participate.”

Earnings per share in the quarter were affected by the following items:

• $83 million in expense, or four cents per share, related to the write-off of in-process research and development resulting from the acquisitions of EqualLogic and Everdream;
• $54 million in expense, or two cents per share, related to business realignment, including severance costs and facility closures;
• $27 million in expense, or one cent per share, in investigation related costs;
• $11 million in amortization expense of purchased intangible assets;
• A reduction in a litigation reserve related to copyright levies of $58 million, or three cents per share; and,
• A $44 million expense reduction, or one cent per share, related to an annual true-up for the full-year of stock award forfeiture credits related to SFAS123R stock-based compensation expense.

In the company’s fiscal 2007 fourth quarter, earnings per share were affected by the following items:

• $207 million reduction in the provision for employee bonuses, or seven cents per share;
• $89 million in expense, or three cents per share, in investigation related costs; and,
• A $36 million one-time gain on the sale of real estate, in financing and other income, or one cent per share.

These items for both quarters are recognized in different tax jurisdictions and therefore are tax-effected at different rates.

The company is addressing cost and productivity across its entire operations. Over the last eight months the company has reduced its global headcount by 3,200, excluding acquisitions. Dell has also accelerated its product refresh cycles with a renewed emphasis on cost, product design and product features. The award winning Dell Inspiron 1525 went from concept to manufacturing in less than half the time of its predecessor and costs were reduced $70 per unit.

“While Dell continues to drive towards a world-class cost structure and competitiveness we have much work to do,” Mr. Dell said. “Resurgent growth puts us on a strong footing to improve our cost position, scale expenses and enhance productivity across our business. I am confident that from this base we can continue to drive improvements in profitability.”

Dell’s achievements in the fourth quarter were led by continued growth in countries outside the United States, where sales were up 16 percent and accounted for 49 percent of the company’s total revenues. Growth was especially strong in BRIC (Brazil, Russia, India and China) countries where revenue grew 36 percent on a 50 percent increase in units. Growth was also strong in Asia Pacific and Japan where revenue grew 28 percent and units were up 41 percent. Americas International revenue grew 22 percent.

Driven by new products, the company increased mobility revenues by 24 percent and unit shipments were up 37 percent. During the year, Dell won more than 400 awards for its products and its notebooks were among the most recognized, demonstrating the company’s significant attention to innovative design and customer experience. Services revenue was up seven percent and the company’s deferred services revenue balance grew 25 percent to $5.3 billion.

Q4 Execution Highlights Against Business Priorities Include:

• Consumer: New strategic partnerships with Best Buy in the U.S.; Tesco and Dixon’s Stores (DSGi) based in the U.K. and Carrefour based in France. More than 10,000 retail stores worldwide now offer Dell products.
• Enterprise: Dell continued to Simplify IT with the:
  • Dell PowerEdge M-Series blade server solution delivering 28 percent better performance per-watt than competitive solutions;
  • Dell EqualLogic PS5000 Series, an iSCSI SAN array with a revolutionary architecture to serve as the backbone for data center storage and virtualization;
  • Dell ProSupport – flexible, scalable and configurable services offerings that challenge the way services are traditionally delivered.
• Notebooks: Richer multimedia with slim packaging with the new:
  • XPS M1530 and the Inspiron 1525; and,
  • Latitude XT, one of the thinnest and lightest 12.1-inch convertible tablets available.
• Small and Medium Business: New products included the Dell AX4-5, an entry-level storage area network (SAN) solution. PartnerDirect increases and formalizes Dell’s support for its growing family of 30,000 Partners worldwide serving small and medium businesses.
• Emerging Countries: Dell deepened its support for Emerging Countries, adding a second manufacturing facility in Europe, located in Lódz, Poland.

Regional Highlights

• Americas Business Unit: Revenues were up 7 percent for the quarter and shipments increased 13 percent driven by a 22 percent increase in revenues from Americas International. Revenue in Brazil, a key emerging country for Dell, grew 52 percent. Dell maintained its No. 1 position in the U.S. commercial segment with 35 percent of all units shipped in the quarter, according to industry analyst estimates. As the quarter progressed, Dell saw more conservative spending by some of it customers, particularly in global accounts, including financial services.
• U.S. Consumer: Revenue growth accelerated to 12 percent driven by a 25 percent increase in shipments. Unit share increased by over three points – the largest quarterly gain in over three years. New product offerings and expansion into retail contributed to this performance.
• Asia-Pacific and Japan (APJ): Revenue in the quarter grew by 28 percent on a 41 percent increase in units. APJ growth was strong across all product categories and led by performance in India, China and Australia/New Zealand, where revenue grew year over year 57 percent, 32 percent, and 29 percent, respectively. Shipments of notebooks increased 71 percent year over year for the region.
• Europe, Middle East and Africa (EMEA): Revenue increased 8 percent and shipments were up 14 percent. Shipments of notebooks increased 36 percent for the quarter and mobility revenue was up 25 percent. Revenues in EMEA emerging countries increased 44 percent.

Company Outlook
The company will continue to incur costs as it realigns its business to improve growth and profitability. While the company believes these actions are necessary to drive long-term sustainable value, they may adversely impact the company’s near-term performance. In addition the company’s results could be adversely impacted by more conservative spending by its customers. The company is, however, benefiting from accelerating growth and an improving mix of products and geographic regions, and the company expects to achieve substantial improvements in cost and productivity.