Dell Reaffirms Guidance for Third-Quarter Revenue, Earnings; Company Says Profitable Share Growth Producing Continued Strategic, Operating Strength.

Business Editors & High-Tech Writers

AUSTIN, Texas--(BUSINESS WIRE)--Oct. 4, 2001

Dell (Nasdaq:DELL) will reaffirm its previous guidance for the fiscal third quarter when executives address investors, analysts and reporters this morning.

Company officials will point to the potency and efficiency of the company's direct business model in the face of continued economic and industry challenges, while cautioning that one-third of the third quarter remains.

Company officials will make their comments during a teleconference that begins at 9 a.m. (EDT), and which will be available "live" as an audio Webcast, with support material, at www.dell.com/investor/. Dell's third quarter ends Nov. 2; the company plans to announce full results for the period, and offer guidance for fourth-quarter performance, on Nov. 15.

Dell said in mid-August that it was targeting earnings of 15 to 16 cents per share, on revenue of $7.2 to $7.6 billion, for the third quarter.

Michael Dell, the company's chairman and chief executive officer, said prior to today's teleconference that while conditions in the computer-systems industry remain difficult, the company's strategic, operating and financial position "is better than it's ever been."

"We're winning new customers at a rapid rate and successfully managing our operating expenses," said Mr. Dell. "Those strengths in the midst of a trying period give us great confidence for the long term."

He said the company expects to make further share gains in all product categories, customer segments and regional markets during the current quarter, even as it continues to achieve industry-leading profitability.

"More than ever, customers are insisting on superior price-for-performance, and no company is able to deliver that more effectively than Dell," said Kevin Rollins, Dell's president and chief operating officer. "As global spending on information technology improves, and we firmly believe it will, we'll be a stronger company with even greater opportunities."

According to Mr. Rollins, industry pricing remains competitive, but not unexpectedly so. Component costs continue to decline rapidly, he said, savings that Dell is able to pass quickly to customers through its low-cost, low-inventory, build-to-order business model.

In the second quarter, Dell's operating expenses as a percent of revenue were the lowest in company history, and about one-half those of its leading competitors. Inventory in dollar terms was reduced by one-third, and to a record-low four days of supply, even as overall unit shipments increased 19 percent.

More recently, the company said relationships with key vendors and aggressive supply-chain management permitted Dell to operate with no meaningful interruption when air transportation in the United States was halted in the days immediately following the Sept. 11 terrorist attacks.

Dell believes it is continuing to assert itself in enterprise products and services. During Q2, the company posted 33-percent growth in global shipments of enterprise computing systems. Dell server volumes jumped 36 percent, compared with a 1-percent increase in total industry server shipments. The company gained more than four points of worldwide server market share, and better than seven share points in the United States.

Mr. Rollins said Dell's primary objective over the past three-plus weeks has been meeting the needs of customers, including government and relief agencies, affected by and involved in recovery from the terrorist attacks in New York City and Washington, D.C. He said contributions to the relief effort from the company, employees and executives will approach $3 million.

About Dell

Dell Computer Corporation (Nasdaq:DELL) is the world's No. 1 computer systems company and is a premier provider of products and services required for customers to build their information-technology and Internet infrastructures. The company's revenue for the past four quarters totaled $32.6 billion. Dell ranks No. 48 on the Fortune 500, No. 122 on the Fortune Global 500 and No. 7 on the Fortune Global "most admired" lists of companies. 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 on the World Wide Web at www.dell.com.

Dell is a trademark of Dell Computer Corporation.

Fortune and Fortune 500 are registered trademarks 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 (including statements regarding the company's revenue and earnings guidance) 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 excess inventory, declining inventory values and obsolescence; the product, customer and geographic sales mix of any particular period; the company's ability to recover its investments in venture capital activities; the company's ability to effectively manage its operating costs; and the effect of armed hostilities or other conflict 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 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.