Dell's Q2 Earnings Rise 58 Percent, as Revenue Climbs 42 Percent; Internet Benefits to Customers, Company Expanding; Online Sales Reach $30 Million Per Day.ROUND ROCK, Texas--(BUSINESS WIRE)--Aug. 17, 1999-- 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) continued to grow faster than the industry across its business, leading to record operating results in the fiscal second quarter. Overall, earnings per share rose 58 percent, to 19 cents, for the period ended July July: see month. 30, as quarterly revenue increased 42 percent, to $6.1 billion. -0-
Second Quarter
(in millions, except share data) FY '00 FY '99 Change
------ ------ ------
Revenue $6,142 $4,331 42%
Operating Income $694 $483 44%
Net Income $507 $346 47%
Earnings Per Share $0.19 $0.12 58%
Year to Date
(in millions, except share data) FY '00 FY '99 Change
------ ------ ------
Revenue 11,679 $8,251 42%
Operating Income $1,294 $912 42%
Net Income $941 $650 45%
Earnings Per Share $0.34 $0.23 48%
-0- Dell was the No. 1 U.S. supplier of personal computer systems in the quarter, based on a comparison of its actual product shipments to analyst estimates for the broad industry. Dell's momentum was exceptionally strong with consumer and small-business customers. "We are now the largest direct company within the worldwide home and small-business market, and are significantly more profitable in that space than our nearest direct competitor," said Michael Dell Michael Saul Dell (born February 23, 1965, in Houston, Texas) is the founder and CEO of Dell, Inc. Biography Early life and education The son of an orthodontist, Dell was born in to an upper-class Jewish family and attended Herod Elementary School in Houston, , the company's chairman and chief executive officer. "Our U.S. consumer shipments grew more than 100 percent in the quarter, and about one-half of those sales were generated online, through www.dell.com." Dell, he said, is "continuing to set the competitive terms for the global computer systems industry." He added that the 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 is central to further extending the distinctive competitive advantages of the company's direct business model. "We believe that we're we're Contraction of we are. we're we are among the leaders in any industry in bringing the Internet's massive efficiencies to bear on our own business," said Mr. Dell. "Combining that growing expertise with our extensive range of services and award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" products makes for a powerful value proposition for all types of customers, from the largest corporations to consumers at home." In the last month of the quarter, Internet sales to Dell customers reached $30 million per day, representing nearly 40 percent of company revenue and an $11 billion annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. run rate. Dell's online sales were double the combined revenue of the other top 20 Internet shopping sites, as measured by Media Metrix. Dell introduced new Internet See Web 2.0 and Internet2. commerce features for corporate, government and education customers during the second quarter. Benefits of the features include simplified sim·pli·fy tr.v. sim·pli·fied, sim·pli·fy·ing, sim·pli·fies To make simple or simpler, as: a. To reduce in complexity or extent. b. To reduce to fundamental parts. c. navigation navigation, science and technology of finding the position and directing the course of vessels and aircraft. Early Navigational Techniques In ancient times, mariners navigated by the guidance of the sun and stars and landmarks along the coast. , dynamic product pricing and easier ordering of standard system configurations through more than 27,000 customer-specific "Premier Pages" within www.dell.com. Dell again led industry growth in unit shipments, revenue and earnings. Company shipments increased 55 percent, two times analyst estimates of total industry growth. Dell's 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. was 11.3 percent of revenue, up from 11.1 percent a year ago as 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. declined nearly one full percentage point. Net income was 8.2 percent, a year-over-year increase from 8.0 percent. Cash from operations in the quarter reached $930 million, a portion of which was used to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 17 million shares of the company's common stock. Dell ended the period with $4.7 billion in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , up 80 percent from the prior year and a company record. Dell's robust earnings growth and superior asset management helped it achieve a record return on invested capital of 260 percent -- four times larger than that of its nearest major competitor. Dell closed the period with six days of inventory. Americas A·mer·i·cas , the See America. Home and Small-Business Sales a Highlight The company's Americas revenue increased 48 percent, led by sales of computer systems to consumers, small businesses and government agencies. Revenue from home and small-business customers grew 67 percent from one year ago. Analysts said Dell's U.S. consumer market-share ranking has jumped from No. 7 to No. 4 since the first half of last year; the company is No. 1 in shipments to small businesses. A range of new Web-based capabilities introduced during the quarter is expected to strengthen direct, long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. relationships with home PC customers, and help sustain Dell's industry-leading momentum in the category over time. Among the initiatives: Dellnet, an Internet-access program; a branded Internet portal which provides personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. online services; and a Web site, DellAuction.com, where customers buy and sell pre-owned or refurbished Dell systems at auction and purchase computer-related products at market prices. Dell's sales to large and medium business customers continued to grow at a very healthy rate in the second quarter, and the company believes it was once again the No. 1 supplier of all PC systems to U.S. businesses. Toyota Toyota (toi-ō`tə, Jap. tōyō`tä), city (1990 pop. 332,336), Aichi prefecture, central Honshu, Japan. It is a major industrial center dominated by the Toyota Motor Company, which produces passenger vehicles and auto parts there. Motor Sales USA Inc., The Boeing (language) BOEING - An early system on the IBM 1130. [Listed in CACM 2(5):16, May 1959]. Co. and First Union Corp. were among major customers which selected Dell as a corporate computing computing - computer standard during the period. In Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Dell achieved a 24-percent revenue gain, with company
shipments growing at more than double those for the total industry.
According to according toprep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. industry analysts, Dell strengthened its place as the No. 2 regional computer systems vendor, claiming more than a 10-percent share of the market for the first time. The company's No. 1 ranking in PC shipments within the United Kingdom was another first. Revenue in France, a strategic national market, increased 55 percent during the period. Dell shipment growth 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 continued to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the industry in the second quarter, as the company's regional revenue rose 52 percent. Dell sales in China, where the company has employed its direct business model for just three full quarters, were one-third higher than those recorded during the first three months of the year. Dell Strengthens No. 2 Share of U.S. Server Market Second-quarter revenue from network servers, workstations and storage products -- collectively referred to as enterprise systems -- increased 85 percent from a strong year-ago period. Dell PowerEdge This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. servers gained more than three points of U.S. and worldwide market share. Analysts reported that Dell's No. 2 U.S. server share was nearly twice that of No. 3 IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) . Additionally, analysts said that Dell Precision Dell Precision is a line of workstation computers produced by Dell, Inc.. Current Dell Precision Desktop Models
Total revenue from 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 49 percent despite continued industrywide in·dus·try·wide adv. & adj. Throughout an entire industry: sales that have decreased industrywide; industrywide cooperation. constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. on the supply of flat-panel displays flat-pan·el display n. A thin lightweight video display used in laptop and notebook computers and employing liquid crystals, electroluminescence, or a similar alternative to cathode-ray tubes. Also called flat screen. . Company shipments of desktop and notebook computers increased at twice the industry averages, allowing Dell to maintain its global rankings of No. 2 and No. 4, respectively. Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 Demand Issue Fading fading fading skin coloring. See Arabian fading syndrome (below). Declining in body condition, general health, activity and productivity. Arabian fading syndrome general health is unimpaired. Mr. Dell said that uncertainty about the Year 2000 issue and its effect on computer-system purchasing is diminishing di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. , and that overall demand should be very healthy in the year's second half. "Based on what customers are telling us, we expect sequential One after the other in some consecutive order such as by name or number. industry growth to follow historical trends, Y2K notwithstanding," said Mr. Dell. He referred to a Dell survey of nearly 900 information-technology decision makers completed earlier this month. "And we're very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our ability to grow at a multiple of the industry rate." He added that anticipated demand increases by U.S. federal government agencies, consumers and small businesses should provide for a strong second half of the year. Ranked No. 78 among the Fortune 500 companies and No. 210 in the Fortune Global 500, Dell Computer Corporation is the world's leading direct computer systems company, based on revenues of $21.7 billion for the past four quarters. Dell 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 through its toll-free number 800/388-8542 or by accessing the Dell World Wide Web site at www.dell.com. Dell, PowerEdge and Latitude are registered trademarks; Dell Precision and Inspiron are trademarks; and Premier Pages is a service mark of Dell Computer Corporation. Windows NT (Windows New Technology) A 32-bit operating system from Microsoft for Intel x86 CPUs. NT is the core technology in Windows 2000 and Windows XP (see Windows). Available in separate client and server versions, it includes built-in networking and preemptive multitasking. is a registered trademark of Microsoft Corporation (company) Microsoft Corporation - The biggest supplier of operating systems and other software for IBM PC compatibles. Software products include MS-DOS, Microsoft Windows, Windows NT, Microsoft Access, LAN Manager, MS Client, SQL Server, Open Data Base Connectivity (ODBC), MS Mail, . Fortune 500 is a registered trademark and Fortune Global 500 is a trademark of Time Inc. 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 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 the level of demand for personal computers; the intensity of competition; currency fluctuations; the cost and availability of certain key components; and the company's ability to effectively manage product transitions, 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 and obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. and to continue to expand and improve its infrastructure (including personnel and systems). 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of income and financial position follow. -0-
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended % Growth Rates
---------------------------- ---------------------
July 30, April 30, Aug. 2,
1999 1999 1998 Sequential Yr. to Yr.
-------- --------- -------- ---------- ----------
Net revenue $6,142 $5,537 $4,331 10.9% 41.8%
Cost of revenue 4,788 4,347 3,346 10.1% 43.1%
------ ------ ------
Gross margin 1,354 1,190 985 13.8% 37.5%
Selling, general
and administrative 569 508 436 12.0% 30.3%
Research,
development and
engineering 91 82 66 11.3% 39.0%
------ ------ ------
Total operating
expenses 660 590 502 11.9% 31.4%
------ ------ ------
Operating income 694 600 483 15.7% 43.7%
Financing and other 30 20 11
------ ------ ------
Income before
income taxes 724 620 494 16.7% 46.6%
Provision for income
taxes 217 186 148
------ ------ ------
Net income $507 $434 $346 16.7% 46.6%
====== ====== ======
Basic earnings per
common share $0.20 $0.17 $0.14 17.6% 42.9%
====== ====== ======
Diluted earnings
per common share $0.19 $0.16 $0.12 18.8% 58.3%
====== ====== ======
Weighted average
shares outstanding:
Basic 2,524 2,528 2,529
Diluted 2,725 2,738 2,785
Percentage of Net Revenue:
--------------------------
Gross margin 22.0% 21.5% 22.7%
Selling, general
and administrative 9.2% 9.2% 10.1%
Research, development
and engineering 1.5% 1.5% 1.5%
Total operating
expenses 10.7% 10.7% 11.6%
Operating income 11.3% 10.8% 11.1%
Income before income
taxes 11.7% 11.2% 11.3%
Net income 8.2% 7.8% 8.0%
Income tax rate 30.0% 30.0% 30.0%
Net revenue by geographic region:
---------------------------------
% of total net revenue
-----------------------
Americas 71% 69% 69%
Europe 22% 24% 25%
Asia-Pacific and Japan 7% 7% 6%
Net revenue by product line:
----------------------------
% of system net revenues
------------------------
Desktops 60% 61% 66%
Enterprise 16% 16% 12%
Portables 24% 23% 22%
------ ------ ------
Total system net
revenues 100% 100% 100%
====== ====== ======
Non-system net
revenues 8% 8% 6%
(peripherals,
other); % of total
system net revenues
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Year To Date
---------------------
July 30, Aug. 2, Yr. to Yr.
% Growth
1999 1998 Rates
-------- -------- -----------
Net revenue $11,679 $8,251 41.5%
Cost of revenue 9,135 6,393 42.9%
-------- --------
Gross margin 2,544 1,858 36.9%
Selling, general and
administrative 1,077 824 30.7%
Research, development
and engineering 173 122 41.8%
-------- --------
Total operating
expenses 1,250 946 32.1%
-------- --------
Operating income 1,294 912 41.9%
Financing and other 50 17
-------- --------
Income before income
taxes 1,344 929 44.7%
Provision for income
taxes 403 279
-------- --------
Net income $941 $650 44.8%
======== ========
Basic earnings per
common share $0.37 $0.26 42.3%
======== ========
Diluted earnings per
common share $0.34 $0.23 47.8%
======== ========
Weighted average shares
outstanding:
Basic 2,526 2,537
Diluted 2,731 2,792
Percentage of Net
Revenue:
-----------------
Gross margin 21.8% 22.5%
Selling, general and
administrative 9.2% 10.0%
Research, development
and engineering 1.5% 1.5%
Total operating
expenses 10.7% 11.5%
Operating income 11.1% 11.0%
Income before income
taxes 11.5% 11.2%
Net income 8.1% 7.9%
Income tax rate 30.0% 30.0%
Net revenue by geographic region:
---------------------------------
% of total net revenue
----------------------
Americas 70% 68%
Europe 23% 25%
Asia-Pacific and Japan 7% 7%
Net revenue by product line:
----------------------------
% of system net revenues
------------------------
Desktops 60% 66%
Enterprise 16% 12%
Portables 24% 22%
-------- --------
Total system net
revenues 100% 100%
======== ========
Non-system net revenues 8% 6%
(peripherals, other);
% of total system net revenues
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)
July 30, April 30, Aug. 2,
1999 1999 1998
----------- ------------ ------------
Assets:
-------
Current assets:
Cash $764 $620 $511
Marketable securities 3,951 3,384 2,107
Accounts receivable, net 2,424 2,151 1,800
Inventories 336 289 288
Other 588 561 394
----------- ------------ ------------
Total current assets 8,063 7,005 5,100
Property, plant and
equipment, net 601 536 446
Other 44 22 14
---------- ------------ ------------
Total assets $8,708 $7,563 $5,560
========== ============ ============
Liabilities and Stockholders' Equity:
-------------------------------------
Current liabilities:
Accounts payable $3,007 $2,641 $1,928
Accrued and other 1,433 1,247 1,209
---------- ------------ ------------
Total current liabilities 4,440 3,888 3,137
Long-term debt 513 514 512
Other 385 346 312
---------- ------------ ------------
Total liabilities 5,338 4,748 3,961
Stockholders' equity 3,370 2,815 1,599
---------- ------------ ------------
Total liabilities and
stockholders' equity $8,708 $7,563 $5,560
========== ============= ============
Ratios:
-------
Current ratio 1.82 1.80 1.63
Quick ratio 1.61 1.58 1.41
Days supply in inventory 6 6 8
Days of sales in accounts
receivable 36 35 37
Days in accounts payable 57 55 52
Other Information:
------------------
Headcount (approximate) 29,300 26,100 20,800
Average total revenue/unit $2,200 $2,300 $2,400
(approximate)
Return on invested capital(a) 260% 189% 217%
Note: Ratios are calculated based on underlying data in thousands.
(a) Calculation excludes cash and marketable securities in excess of
5% of annualized revenue.
-0- |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion