Dell's Q1 Revenue up 18 Percent, Operating Income up 37 Percent; Profits Outside Americas Nearly Double; Company Expects Continued Strong Shipment, Revenue, EPS Growth in Second Quarter.Business Editors/High-Tech Writers ROUND ROCK, Texas--(BUSINESS WIRE)--May 15, 2003 Dell (Nasdaq:DELL) reported its best-ever fiscal first-quarter operating results, recording exceptional growth and profitability in all product and regional markets, and said second-quarter increases should also be strong. Dell worldwide shipments in the quarter ended May 2 were up 29 percent from a year ago; volumes for the rest of the industry declined an average 1 percent. Growth was robust outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. -- 40 percent in Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). and Japan, and 29 percent in Europe, the Middle East and Africa Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. It is particularly common amongst North American based companies, who often divide their international operations into the , as operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in both regions nearly doubled to record levels. The company's 40-percent increase in server shipments was more than four times the average of other suppliers. Dell accounted for almost one-third of U.S. server volumes, and has led the category for more than two years. Revenue from external storage systems was up 65 percent. Dell's first-quarter net earnings totaled $598 million, or 23 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , up from $457 million, or 17 cents per share, for the same period one year ago. Revenue was $9.5 billion, up 18 percent from $8.1 billion.
(in millions, except
per-share data) Q1 FY'04 Q1 FY'03 Change
-------- -------- ------
Revenue $9,532 $8,066 18%
Operating Income $811 $590 37%
Net Income $598 $457 31%
Earnings Per Share $0.23 $0.17 35%
"The words and actions of customers are clear," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. S. Dell, Dell's chairman of the board and chief executive officer. "They're they're Contraction of they are. they're be recognizing the performance and reliability of standards-based enterprise computing Refers to information technology in the larger company. See enterprise data and enterprise networking. , and choosing such servers and storage products at an accelerating rate. "Dell's unique ability is innovating, integrating and delivering technology with the best possible value, and our execution in those areas has never been better." First-quarter operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. as a percent of revenue was 8.5 percent, Dell's highest in two and one-half years. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were a record low 9.8 percent of revenue, down from 9.9 percent a year ago. Cash and investments at the end of the quarter totaled $10.3 billion, a new high, as Dell generated $812 million in cash from operations. Inventory in dollar terms was 7 percent lower than a year ago, even as company unit volumes rose 29 percent. For the fiscal second quarter, Dell expects its unit volumes to increase about 25 percent year-over-year, markedly ahead of predicted 3 percent growth for the rest of the industry. Dell anticipates a 15-percent increase in second-quarter revenue, to more than $9.7 billion, and earnings per share of 24 cents, a 26-percent increase. Company's Competitive Momentum Reaches Worldwide Dell's shipment growth was exceptional around the globe, especially compared to that of other companies. Excluding Dell, industry volumes were up 1 percent in Asia-Pacific and Japan, and 4 percent in Europe, the Middle East and Africa (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ). U.S. shipments for other computer-systems suppliers dropped an average 6 percent. Strength in EMEA was broadly based, with company volume growth exceeding 30 percent in 10 national markets. Shipments of PowerEdge servers in the region increased 31 percent, more than three times the rate of the rest of the industry. Revenue from external storage systems was up 81 percent. Dell was the No. 2 computer-systems supplier in France, up from No. 3 a year ago, with 38-percent unit growth. Company shipment growth was 35 percent in the United Kingdom. Dell's server share in the U.K. was 29 percent, and surpassed 20 percent in France for the first time. In China, now Dell's fourth-largest national market, overall product shipments rose 67 percent, and those of servers more than doubled. Total volumes in Japan rose 36 percent; the balance of the industry was down 9 percent. For all of Asia-Pacific and Japan, Dell server volumes were up 45 percent, four times higher than the rest of the market. Sales of PowerVault and Dell EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. storage products increased 90 percent. At the same time, the Dell brand name gained further recognition in Japan. Respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. to a survey by a leading national business publication ranked the company No. 1 in after-sale customer service across 11 consumer industries, and atop personal-computing suppliers for the third consecutive year. In the U.S., Dell's overall market share was nearly six points higher than a year ago. Company server volumes in the country were up 43 percent, more than three times the industry rate without Dell. U.S. storage revenue was 53 percent higher. Shipments to small and medium businesses increased 32 percent; those to U.S. consumers rose 46 percent. The company's Americas A·mer·i·cas , the See America. business outside the U.S. was also robust, highlighted by a 77-percent volume increase in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . Data Storage, Wireless Computing computing - computer Contribute to Growth Dell's continued rapid growth in servers is being driven, in part, by increasing demand for high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" clusters of such systems as powerful, low-cost alternatives to proprietary UNIX UNIX Operating system for digital computers, developed by Ken Thompson of Bell Laboratories in 1969. It was initially designed for a single user (the name was a pun on the earlier operating system Multics). platforms for supercomputing applications. In storage, Dell recently began manufacturing the Dell EMC CX200 product worldwide, and introduced new storage-area-network bundles of hardware, software and services for small and mid-sized businesses and institutions. First-quarter shipments of the company's Inspiron and Latitude latitude, angular distance of any point on the surface of the earth north or south of the equator. The equator is latitude 0°, and the North Pole and South Pole are latitudes 90°N and 90°S, respectively. notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. rose 31 percent, almost three times the rate of industry growth without Dell. During the period, Dell introduced a new line of Latitude Noun 1. line of latitude - an imaginary line around the Earth parallel to the equator parallel of latitude, parallel, latitude polar circle - a line of latitude at the north or south poles notebook computers based on Intel Centrino The first x86 chip platform for PCs. Introduced in 2003 by Intel, the Centrino package comprises the CPU chip, chipset and wireless network module. Initially offering the Pentium M chip, the Celeron M CPU was later added for the value market. mobile technology. All Latitude notebooks now include wireless networking See wireless network. capabilities. Dell shipped a combined 28 percent more Dimension and OptiPlex desktop computers in the most-recent quarter than it did a year ago. Desktop shipments by other companies were down an average of 5 percent. Technology Business Research Inc. (TBR TBR Tennessee Board of Regents TBR Technology Business Research TBR To Be Read TBR Travel Business Roundtable TBR To Be Resolved TBR To Be Reviewed TBR Technical Basis for Regulation TBR To Be Recorded TBR Total Business Return TBR To Be Revised ) again cited Dell for its service and support to corporate information-technology customers. With its latest survey, TBR customers have ranked Dell No. 1 among hardware vendors for all 10 quarters the research has been conducted. Separately, TBR showed Dell as No. 1 in desktop-computer customer satisfaction for the 22nd straight quarter. About Dell Dell Computer Corporation (company) Dell Computer Corporation - One of the biggest US manufacturers of IBM PC compatibles. "From notebooks to networks", their slogan says. http://us.dell.com. (Nasdaq:DELL) is a premier provider of products and services required for customers worldwide to build their information-technology and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the infrastructures. Company revenue for the past four quarters totaled $36.9 billion. Dell, through its direct business model, designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals. Information on Dell and its products can be obtained at www.dell.com. NOTE TO EDITORS: In the term "Dell EMC," there is a pipe symbol between "Dell" and "EMC." It was removed for transmission purposes only. Dell, PowerEdge, PowerVault, Inspiron, Latitude, Dimension and OptiPlex are trademarks of Dell Computer Corporation. EMC is a registered trademark of EMC Corp. Intel Centrino is a trademark of Intel Corp. Market comparisons based on IDC data. Dell disclaims any proprietary interest in the marks and names of others. Special note: Statements in this press release that relate to future results and events (including statements about fiscal second-quarter financial and operating performance) are based on the company's current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including general economic and business conditions; the level of demand for the company's products and services; the level and intensity of competition in the technology industry and the pricing pressures that have resulted; the company's ability to timely and effectively manage periodic product transitions, as well as component availability and cost; the company's ability to develop new products based on new or evolving technology and the market's acceptance of those products; the company's ability to manage its inventory levels to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. excess inventory, declining inventory values and obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; the product, customer and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. sales mix sales mix See product mix. of any particular period; the company's ability to effectively manage its operating costs operating costs npl → gastos mpl operacionales ; and the effect of armed hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. , terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. or public health issues on the economy generally, on the level of demand for the company's products and services and on the company's ability to manage its supply and delivery logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. in such an environment. Additional discussion of these and other factors affecting the company's business and prospects is contained in the company's periodic filings with the Securities and Exchange Commission.
Consolidated statements of income and financial position follow.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Operations and Related Financial
Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended
----------------------
% Growth Rates
-----------------
May 2, Jan. 31, May 3, Yr. to
2003 2003 2002 Sequential Yr.
------- ------- ------- -----------------
Net revenue $9,532 $9,735 $8,066 (2.1%) 18.2%
Cost of revenue 7,784 7,954 6,675 (2.1%) 16.6%
------- ------- -------
Gross margin 1,748 1,781 1,391 (1.9%) 25.7%
Selling, general and
administrative 826 845 691 (2.3%) 19.5%
Research, development and
engineering 111 117 110 (5.2%) 1.4%
------- ------- -------
Total operating expenses 937 962 801 (2.6%) 17.0%
------- ------- -------
Operating income 811 819 590 (0.9%) 37.4%
Investment and other
income, net 43 42 48 1.4% (11.1%)
------- ------- -------
Income before income taxes 854 861 638 (0.8%) 33.7%
Income tax provision 256 258 181 (0.5%) 40.8%
------- ------- -------
Net income $598 $603 $457 (0.9%) 30.9%
======= ======= =======
Earnings per common share:
Basic $0.23 $0.23 $0.18
======= ======= =======
Diluted $0.23 $0.23 $0.17
======= ======= =======
Weighted average shares
outstanding:
Basic 2,572 2,576 2,595
Diluted 2,614 2,621 2,672
Percentage of Total Net
Revenue:
--------------------------
Gross margin 18.3% 18.3% 17.2%
Selling, general and
administrative 8.6% 8.7% 8.5%
Research, development and
engineering 1.2% 1.2% 1.4%
Total operating expenses 9.8% 9.9% 9.9%
Operating income 8.5% 8.4% 7.3%
Income before income taxes 9.0% 8.8% 7.9%
Net income 6.3% 6.2% 5.7%
Income tax rate 30.0% 30.0% 28.5%
Net Revenue by Geographic
Region:
---------------------------
Percentage of Total Net
Revenue
---------------------------
Americas 68% 69% 69%
Europe 21% 21% 21%
Asia Pacific - Japan 11% 10% 10%
Net Revenue by Product
Line:
---------------------------
Percentage of Total Net
Revenue
---------------------------
Desktops 53% 55% 54%
Notebooks 27% 26% 27%
Enterprise 20% 19% 19%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Financial Position and Related
Financial Highlights
(in millions, except for "Ratios" and "Other information")
(unaudited)
May 2, Jan. 31, May 3,
2003 2003 2002
--------- --------- ---------
Assets:
-----------
Current assets:
Cash and cash equivalents $4,474 $4,232 $3,617
Short term investments 388 406 343
Accounts receivable, net 2,656 2,586 2,308
Inventories, net 264 306 284
Other 1,238 1,394 1,286
--------- --------- ----------
Total current assets 9,020 8,924 7,838
Property, plant and equipment,
net 889 913 834
Investments 5,470 5,267 4,234
Other non-current assets 333 366 410
--------- --------- ----------
Total assets $15,712 $15,470 $13,316
========= ========= ==========
Liabilities and Stockholders'
Equity:
------------------------------
Current liabilities:
Accounts payable $6,082 $5,989 $5,062
Accrued and other 2,787 2,944 2,345
--------- --------- ----------
Total current liabilities 8,869 8,933 7,407
Long term debt 506 506 520
Other 1,261 1,158 868
--------- --------- ----------
Total liabilities 10,636 10,597 8,795
Stockholders' equity 5,076 4,873 4,521
--------- --------- ----------
Total liabilities and
stockholders' equity $15,712 $15,470 $13,316
========= ========= ==========
Ratios:
-----------
Quick ratio 0.85 0.81 0.85
Days supply in inventory 3 3 4
Days of sales outstanding(a) 29 28 30
Days in accounts payable 70 68 68
--------- --------- ----------
Cash conversion cycle (38) (37) (34)
Other Information:
------------------------------
Headcount (approximate) 40,000 39,100 34,800
Average total revenue/unit
(approximate) $1,620 $1,640 $1,770
Note: Ratios are calculated based on underlying data in thousands.
(a) Days of sales outstanding include the effect of product costs
related to in-transit customer shipments (arising from the
adoption of SAB 101) that are classified in other current assets.
At May 2, 2003, Jan., 31, 2003 and May 3, 2002, days of sales
outstanding included days of sales in accounts receivable and days
of in-transit customer shipments of 25 and 4 days; 24 and 4 days;
and 26 and 4 days, respectively.
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