Dell Reports $6.8 Billion in Revenue, Per-Share Earnings of 16 Cents; Continued Growth in Internet Infrastructure Sales, Nonsystem Revenue Highlight Fiscal Q4.Business Editors and High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers ROUND ROCK, Texas--(BUSINESS WIRE)--Feb. 10, 2000 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) reported that worldwide product shipments grew at more than double the industry rate in its fiscal fourth quarter, which ended Jan. 28. Sales of enterprise-class products were sharply higher in the period, as Dell continued to establish itself as the industry's 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 infrastructure company. Dell said net revenue for the quarter grew 31 percent, to $6.8 billion. Fourth-quarter net earnings increased to $436 million, or 16 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. . For the full year, net revenue was $25.3 billion, up 38 percent. Absent a charge associated with the purchase of ConvergeNet Technologies Inc., fiscal 2000 net income totaled $1.9 billion, or 68 cents per share. The full-year results maintained Dell's position as the industry's fastest-growing and most profitable company.
Fourth Quarter
(in millions, except share data) FY '00 FY '99 Change
------ ------ ------
Revenue $6,801 $5,173 31%
Operating Income $513 $595 (14%)
Net Income $436 $425 3%
Earnings Per Share $0.16 $0.15 7%
Full Year(a)
(in millions, except share data) FY '00 FY '99 Change
------ ------ ------
Revenue $25,265 $18,243 38%
Operating Income $2,457 $2,046 20%
Net Income $1,860 $1,460 27%
Earnings Per Share $0.68 $0.53 28%
(a) Full-year FY '00 income/earnings data exclude a $194 million
charge for purchased in-process research and development related
to the acquisition of ConvergeNet Technologies Inc.
Dell had announced on Jan. 26 that fourth-quarter revenue and earnings would be affected by an inconsistent Reciprocally contradictory or repugnant. Things are said to be inconsistent when they are contrary to each other to the extent that one implies the negation of the other. flow of key semiconductor components, and a slower-than-anticipated rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in sales to corporate and institutional customers following the Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 rollover A graphic element in an application or on a Web page that changes its color or shape when the pointer is moved (rolled) over it. See JavaScript rollover. See also n-key rollover. . The effects of those issues were evident in key operating ratios Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: . 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 11.6 percent of revenue in the most recent quarter, up from 11.0 percent in the year-ago period. Net income as a percent of revenue was 6.4 percent, down from 8.2 percent. Dell used a portion of $835 million in cash from operations during the quarter 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. seven million shares of its common stock. The company ended the period with $6.9 billion in cash and investments, more than double the level from the prior year. A sustained focus on asset management helped Dell achieve a return on invested capital of 281 percent for the second straight quarter. Dell had six days of inventory as it closed the period. Sales through dell.com reached nearly 50 percent of revenue and averaged $40 million per day -- up from $14 million a year ago -- by the end of the quarter. Further, Chairman and Chief Executive Officer 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, said selling online represents only a fraction of what the Internet means to the company today and in the future. &uot;Customers are increasingly demanding the type of direct relationship we pioneered in this industry, and the Internet is enhancing that preference,&uot; said Mr. Dell. &uot;They're they're Contraction of they are. they're be insisting in·sist v. in·sist·ed, in·sist·ing, in·sists v.intr. To be firm in a demand or course; refuse to yield: insisted on giving me a second helping. v.tr. on the efficiency and value of our direct Internet business model, and we believe we're we're Contraction of we are. we're we are widening our fundamental competitive advantage in the process. &uot;Analysts estimate that U.S. companies alone will spend $200 billion annually on their Internet infrastructures by 2003, a sizeable portion of which will be for server and storage hardware. That trend plays directly to our strength as the No. 2 and fastest-growing major provider of servers in 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. and the world.&uot; Earlier this week, Dell announced the formation of an Americas A·mer·i·cas , the See America. sales division dedicated to the unique data-center needs of a large and rapidly growing number of 'dot-com' companies, Internet-service providers, and Web- and application-hosting companies. &uot;We already have more than 5,000 active customers in that part of the market,&uot; Mr. Dell said. &uot;Twenty-five percent of Dell sales to these companies are servers and storage products, and many of the largest of these customers are allocating half of their spending with us to enterprise systems.&uot; He added that the company's massive online presence, which runs entirely on Dell products, creates tremendous credibility Believability. The major legal application of the term credibility relates to the testimony of a witness or party during a trial. Testimony must be both competent and credible if it is to be accepted by the trier of fact as proof of an issue being litigated. with customers. &uot;In our view, we are becoming the preferred Internet infrastructure company to businesses large and small,&uot; said Mr. Dell. Dell increased revenue and profitability through sales outside of the core computer systems business. Worldwide services revenue exceeded $490 million in the fourth quarter, more than 50 percent higher than the year-ago period. Other beyond-the-box sales -- including software and peripherals through Gigabuys and DellWare, and the Dellnet Internet service -- grew by nearly one-third, to more than $610 million. Total nonsystem sales accounted for 16 percent of revenue in the period. Demand for one of Dell's unique service capabilities continued to surge See power surge. SURGE - Sorter, Updater, Report Generator, Etc. IBM 704, 1959. Sammet 1969, p.8. . In the fourth quarter, more than 40 percent of computer systems built for Americas enterprise customers passed through the DellPlus process for specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. , in-factory hardware and software integration. Associated worldwide revenue more than doubled year over year. Dell Earns First Full-Year No. 2 Global Ranking According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the company, total product shipments were up 36 percent in the fourth quarter and 50 percent for the year, as industry analysts ranked the company No. 2 worldwide for both the three- and 12-month periods. The company continued its rapid, profitable growth in global sales to small-business and home-PC customers, which rose 57 percent from the year-ago quarter. Overall, Dell Americas fourth-quarter revenue increased 39 percent, and shipment growth was nearly triple the industry rate. The company was No. 1 in the overall U.S. personal-computing market for the third straight quarter, and earned the top full-year share for the first time. Sales to Americas home and small-business customers were up 64 percent. Combined regional sales to small and medium-sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized companies, where Dell is the market leader, jumped 65 percent in the quarter. Like larger corporations, those companies are choosing Dell for servers and storage products as they build what Mr. Dell called &uot;the backbones&uot; of their online businesses. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. revenue rose 8 percent, as the company's product-shipment growth exceeded the industry average. Company revenue from 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 was up 56 percent during the fourth quarter -- sales in China, now Dell's eighth-largest market, more than doubled -- as regional unit volume grew nearly one and one-half times faster than the total industry. Dell Strengthens No. 2 Server Market Share Industry analysts reported that Dell gained nearly five share points and was the No. 2 supplier of server products for the second consecutive quarter. In terms of volume, Dell accounted for more than 40 percent of worldwide industry server growth, in part as a result of demand from companies building out their Internet infrastructures. Dell's momentum in U.S. sales of its PowerEdge servers was even more striking. According to analysts, the company added nearly 10 points of market share and accounted for nearly 25 percent of all servers sold there. The company's combined sales of enterprise computing Refers to information technology in the larger company. See enterprise data and enterprise networking. products -- comprising workstations, storage products and servers -- climbed 55 percent in the period. In the notebook-computer category, Dell saw its U.S. share jump by one-third, to nearly 19 percent, and again ranked No. 1 in the market. On a global basis, the company's shipments of portable PCs exceeded 10 percent for the second straight quarter, ranking No. 4. 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. contributed 28 percent of Dell's combined system revenue in the period, up five percentage points from the prior year. About Dell Computer Corporation Dell Computer Corporation is the world's leading direct computer systems company, based on revenues of $25.3 billion for the past four quarters, and is a premier provider of products and services required for customers to build their Internet infrastructures. The company ranks No. 78 on the Fortune 500, No. 210 on the Fortune Global 500 and No. 3 on the Fortune &uot;most admired&uot; lists of companies. 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 on the World Wide Web at www.dell.com. Dell and PowerEdge are registered trademarks; DellWare is a registered service mark; Dellnet is a trademark; and DellPlus and Gigabuys are service marks 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 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.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended
--------------------------------------
Actual Pro Forma Actual
Jan. 28, Oct. 29, Jan. 29,
2000 1999(a) 1999
--------------------------------------
Net revenue $ 6,801 $ 6,784 $ 5,173
Cost of revenue 5,497 5,414 4,012
-------- -------- --------
Gross margin 1,304 1,370 1,161
Selling, general and
administrative 688 622 492
Research, development
and engineering 103 98 74
-------- -------- --------
Total operating expenses 791 720 566
-------- -------- --------
Operating income 513 650 595
Financing and other 98 40 12
-------- -------- --------
Income before income taxes 611 690 607
Provision for income taxes 175 207 182
-------- -------- --------
Net income $ 436 $ 483 $ 425
======== ======== ========
Basic earnings
per common share $ 0.17 $ 0.18 $ 0.17
======== ======== ========
Diluted earnings
per common share $ 0.16 $ 0.18 $ 0.15
======== ======== ========
Weighted average
shares outstanding:
Basic 2,559 2,538 2,527
Diluted 2,731 2,723 2,749
% Growth Rates
-------------------------------------
Sequential(a) Yr. to Yr.
-------------------------------------
Net revenue 0.2% 31.5%
Cost of revenue 1.5% 37.0%
Gross margin (4.8%) 12.3%
Selling, general and
administrative 10.6% 39.8%
Research, development
and engineering 4.6% 37.8%
Total operating expenses 9.8% 39.6%
Operating income (21.0%) (13.7%)
Financing and other
Income before income taxes (11.5%) 0.7%
Provision for income taxes
Net income (9.7%) 2.7%
Basic earnings
per common share (5.6%) 0.0%
Diluted earnings
per common share (11.1%) 6.7%
Three Months Ended
--------------------------------------
Actual Pro Forma Actual
Jan. 28, Oct. 29, Jan. 29,
2000 1999(a) 1999
--------------------------------------
Percentage of Net Revenue:
Gross margin 19.2% 20.2% 22.4%
Selling, general
and administrative 10.1% 9.2% 9.5%
Research, development
and engineering 1.5% 1.4% 1.5%
Total operating expenses 11.6% 10.6% 11.0%
Operating income 7.6% 9.6% 11.4%
Income before income taxes 9.0% 10.2% 11.7%
Net income 6.4% 7.1% 8.2%
Income tax rate 28.6% 30.0% 30.0%
Net revenue by geographic region:
% of total net revenue
Americas 71% 72% 67%
Europe 22% 21% 27%
Asia-Pacific and Japan 7% 7% 6%
Net revenue by product line:
% of system net revenues
Desktops 55% 59% 63%
Enterprise 17% 17% 14%
Portables 28% 24% 23%
-------- -------- --------
Total system net revenues 100% 100% 100%
======== ======== ========
(a) Three Months Ended Pro Forma Oct. 29, 1999, data and Sequential %
Growth Rates exclude the $194 million charge for purchased
in-process research and development related to the acquisition of
ConvergeNet Technologies Inc.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Year To Date
-------------------------------
Actual Pro Forma Actual Yr. To Yr.
Jan. 28, Jan. 28, Jan. 29, % Growth
2000 2000(a) 1999 Rates(a)
-------------------------------
Net revenue $ 25,265 $ 25,265 $ 18,243 38.5%
Cost of revenue 20,047 20,047 14,137 41.8%
-------- --------- --------
Gross margin 5,218 5,218 4,106 27.1%
Selling, general
and administrative 2,387 2,387 1,788 33.5%
Research, development
and engineering 374 374 272 37.3%
Purchased research
and development 194 -- -- 0.0%
-------- --------- --------
Total operating expenses 2,955 2,761 2,060 34.0%
-------- --------- --------
Operating income 2,263 2,457 2,046 20.1%
Financing and other 188 188 38
-------- --------- --------
Income before income taxes 2,451 2,645 2,084 26.9%
Provision for income taxes 785 785 624
-------- --------- --------
Net income $ 1,666 $ 1,860 $ 1,460 27.4%
======== ========= ========
Basic earnings
per common share $ 0.66 $ 0.73 $ 0.58 25.9%
======== ========= ========
Diluted earnings
per common share $ 0.61 $ 0.68 $ 0.53 28.3%
======== ========= ========
Weighted average
shares outstanding:
Basic 2,536 2,534 2,531
Diluted 2,728 2,726 2,772
Percentage of Net Revenue:
Gross margin 20.7% 20.7% 22.5%
Selling, general
and administrative 9.4% 9.4% 9.8%
Research, development
and engineering 1.5% 1.5% 1.5%
Purchased research
and development 0.8% 0.0% 0.0%
Total operating expenses 11.7% 10.9% 11.3%
Operating income 9.0% 9.8% 11.2%
Income before income taxes 9.7% 10.5% 11.4%
Net income 6.6% 7.4% 8.0%
Income tax rate 32.0% 29.7% 30.0%
Net revenue by geographic region:
% of total net revenue
Americas 71% 71% 68%
Europe 22% 22% 26%
Asia-Pacific and Japan 7% 7% 6%
Net revenue by product line:
% of system net revenues
Desktops 58% 58% 64%
Enterprise 17% 17% 13%
Portables 25% 25% 23%
-------- --------- --------
Total system net revenues 100% 100% 100%
======== ========= ========
(a) YTD Pro Forma Jan. 28, 2000, data and Yr. To Yr. % Growth Rates
exclude the $194 million charge for purchased in-process research
and development related to the acquisition of ConvergeNet
Technologies Inc.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Financial Position
and Related Financial Highlights
(in millions, except for &uot;Ratios&uot; and &uot;Other
information&uot;)
(unaudited)
Jan. 28, Oct. 29, Jan. 29,
2000 1999 1999
--------------------------------
Assets:
Current assets:
Cash and Cash Equivalents(a) $ 3,809 $ 3,150 $ 1,726
Short Term Investments(a) 323 1,042 923
Accounts receivable, net 2,608 2,827 2,094
Inventories 391 374 273
Other 550 651 791
-------- -------- --------
Total current assets 7,681 8,044 5,807
Property, plant
and equipment, net 765 674 523
Long Term Investments(a) 1,048 898 532
Equity Securities
and Other Investments(a) 1,673 767 --
Goodwill 134 138 --
Other 170 45 15
-------- -------- --------
Total assets $11,471 $10,566 $ 6,877
======== ======== ========
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 3,538 $ 3,636 $ 2,397
Accrued and other 1,654 1,688 1,298
-------- -------- --------
Total current liabilities 5,192 5,324 3,695
Long-term debt 508 508 512
Other 463 425 349
-------- -------- --------
Total liabilities 6,163 6,257 4,556
Stockholders' equity 5,308 4,309 2,321
-------- -------- --------
Total liabilities
and stockholders' equity $11,471 $10,566 $ 6,877
======== ======== ========
Ratios:
Current ratio 1.48 1.51 1.57
Quick ratio 1.30 1.32 1.28
Days supply in inventory 6 6 6
Days of sales in
accounts receivable 34 37 36
Days in accounts payable 58 60 54
Other Information:
Headcount (approximate) 36,500 33,200 24,400
Average total
revenue/unit (approximate) $ 2,250 $ 2,100 $ 2,350
Return on invested capital(c) 281% 281%(b) 170%
NOTE: Ratios are calculated based on underlying data in thousands.
(a) Balances have been restated to reflect Q4FY00 reclassification of
cash and cash equivalents, short term investments, long term
investments, equity securities and other investments.
(b) Oct. 29, 1999, return on invested capital calculations exclude
the $194 million charge for purchased in-process research and
development related to the acquisition of ConvergeNet
Technologies Inc.
(c) Calculation excludes cash and short term investments in excess of
5% of annualized revenue.
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