Dell Reports Q2 Preliminary Revenue of $14.8 Billion; Preliminary Earnings Per Share of $0.32.Quarter Highlighted by Improved Growth and Profitability Across All Regions and Strength in Enterprise Products ROUND ROCK, Texas -- Dell (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :DELL) today reported preliminary results for its second quarter of fiscal year 2008, with revenue of $14.8 billion, 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. of $896 million and earnings per share of $0.32. Strength in enterprise products and services, improved average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. and favorable component costs drove profitability in the quarter. 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 were $13.8 billion at the end of the quarter. "We continue to invest in company initiatives that align our products and services around customers' needs in order to drive long-term, sustainable performance and extend our position as a trusted technology partner," said Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 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, . "While our results demonstrate we've made progress against our goals, we are still in the early stages of transforming our company's structure, costs and operations." 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. Impacted by Higher Expenses Several factors adversely impacted 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. in the quarter, including $102 million, or $0.03 per share, in incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. compensation expense related to payments for expired in-the-money stock options; $59 million, or $0.02 per share, in costs associated with the Audit Committee's investigation into certain accounting and financial reporting matters; and higher headcount and associated costs related to investments in sales and customer support. As the company continues to implement its transformation program, the priority is to drive profitable growth while reducing operating expenses as a percentage of revenue. The company expects to accomplish this by improving front-line productivity, reducing headcount where appropriate and investing in infrastructure and key growth initiatives. The company is focused on the optimal alignment of resources, coupled with scaling via growth initiatives and cost reduction, and continues to pursue reductions in headcount. Transformation Update Several actions during the second quarter reflected Dell's ongoing strategy to simplify IT for its customers by reducing the cost, time and complexity of managing information technology, including: * The launch of the Vostro[TM] brand of notebook and desktop computers, the first product line designed for the unique needs of small businesses, featuring simple-to-use tools that address problems such as data back-up and PC performance and health, and dedicated customer support. Vostro products do not include "trialware" and feature specialized networking support for customers who don't have dedicated IT staffs. * The introduction of our new flagship ultra-portable notebook, the XPS (1) See XML Paper Specification. (2) A brand name for certain models of Inspiron laptops from Dell. [TM] M1330, the world's thinnest 13.3-inch notebook, featuring cutting-edge design elements and a durable magnesium alloy chassis with brushed aluminum accents. In addition, new Inspiron notebook systems feature mobile broadband Description Mobile Broadband is a type of wireless internet access that differs from Wi-Fi. Mobile Broadband is the name used to describe the 3G services which are made possible by HSDPA and HSUPA, the latest technologies on the W-CDMA evolutionary path. , widescreen displays, built-in webcams and eight color choices. * Agreements to acquire ASAP (chat) asap - As soon as possible. Software, a leading software solutions and licensing services provider; privately held SilverBack Technologies, Inc., a service delivery platform provider for remote monitoring (protocol) remote monitoring - (RMON) A network management protocol that allows network information to be gathered at a single computer. Whereas SNMP gathers network data from a single type of Management Information Base (MIB), RMON 1 defines nine additional MIBs that provide a and management of information technology infrastructure such as servers, storage, networks, desktops and notebooks; and Zing Systems Inc., a consumer technology and services company that focuses on always-connected audio and entertainment devices. * Announced plans to reach more customers globally via indirect distribution channels through partnerships with Wal-Mart and Sam's Clubs in North and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , Bic Camera Inc. of Japan and Carphone Warehouse in the United Kingdom. Product Performance Driven by Continued Focus on Server and Storage Solutions Server revenue in the second quarter was $1.6 billion. For Q2, Dell was again No. 1 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. in server units shipped with 32.7 percent share. Storage revenues were $0.6 billion. During the quarter, Forrester Consulting1 issued a report that demonstrated how Dell's new IT simplification solutions, which include server consolidation and virtualization An umbrella term for enhancing a computer's ability to do work. Following are the ways virtualization is used. Hardware Virtualization Partitioning the computer's memory into separate and isolated "virtual machines" simulates multiple machines within one physical computer. solutions, increased the ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). benefits for one of Dell's customers. Dell also announced a partnership with Emerson Network Power and its Liebert power and cooling business to help customers lower their datacenter power and cooling requirements by up to 42 percent and increase systems performance by up to 80 percent compared to prior generations of Dell servers. Revenue from mobility products was $3.9 billion while desktop revenue was $5.0 billion. During the quarter, the company ran a higher-than-normal product backlog, driven by better-than-expected demand for the new Inspiron and XPS color notebooks coupled with supply constraints for several colors, and a tightening in supply of certain flat-panel displays. The company believes the supply environment will improve in the second half of the year. Enhanced services revenue was $1.3 billion and software and peripherals revenue was $2.4 billion. Company Outlook The company is focused on IT simplification for its customers, including transforming its business to provide better value to customers while expanding its growth opportunities. These efforts set the stage for a more sustainable balance of liquidity, profitability and growth. During this period of transformation, operating results will vary as the company focuses on making investments and realigning the business. Near-term results could be adversely impacted by a slower decline in component costs in the second half of the year. The company does not expect to resume its share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program until after it has filed its fiscal year 2007 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , which is expected to occur by the first week of November. Preliminary Results Subject to Change As previously announced on Aug. 16, 2007, Dell will restate its previously issued financial statements for fiscal 2003, 2004, 2005 and 2006 (including the interim periods within those years), and the first quarter of fiscal 2007. In addition, the company has not filed its Forms 10-Q for the second and third quarters of fiscal 2007 and the first quarter of fiscal 2008 or its Form 10-K for fiscal 2007. Consequently, all financial results described in this press release, as well as the previously announced financial results for the second, third and fourth quarters of fiscal 2007 and first quarter of 2008, should be considered preliminary, and are subject to change to reflect any necessary corrections or adjustments, or changes in accounting estimates, that are identified prior to the time the company completes the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. and these filings. NASDAQ Listing Update As previously announced, on Aug. 17, 2007, the Board of Directors of The NASDAQ Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. issued its decision to give the company until Nov. 12, 2007 to file its past due periodic reports and regain compliance with NASDAQ's listing requirements Listing requirements Requirements, including minimum shares outstanding, market value, and income, that are laid down by an exchange for any stock to be listed for trading. . Dell previously announced that it expects to file its past due periodic reports by the first week of November. Annual Meeting and Analyst Meeting Update The company's annual meeting of shareholders is being planned for Dec. 4, 2007. The company plans to hold a strategy call on Nov. 29, 2007 when it releases fiscal third quarter 2008 earnings. The company also plans to hold a full analyst meeting on April 2 and 3, 2008, in Round Rock, Texas. About Dell Dell Inc. (NASDAQ:DELL) listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell is a leading global systems and services company and No. 34 on the Fortune 500. For more information, visit www.dell.com, or to communicate directly with Dell via a variety of online channels, go to www.dell.com/conversations. To get Dell news direct, visit www.dell.com/RSS. 1 The Total Economic Impact[TM] Of Dell's Server Consolidation And Virtualization Solutions Single Company Analysis A Commissioned Study Conducted by Forrester Consulting on Behalf of Dell. The complete report may be accessed at www.dell.com/research. Special Note Statements in this press release that relate to future results and events (including statements about our preliminary and expected future financial and operating performance) are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on our current expectations. Actual results may differ materially from the forward-looking statements because of a number of risks and uncertainties, including: the risk that additional information may arise during the completion of our work on the restatement, our independent auditor's review of the investigation and completion of its audit work, the Audit Committee's final review of the investigation and the restated financial statements, and as a result of other subsequent events; any additional issues or matters arising from the ongoing SEC investigation; our ability to successfully remediate identified internal control deficiencies; our ability to meet NASDAQ requirements for continued listing as a result of our past due periodic report filings; general economic, business and industry conditions; our ability to maintain a cost advantage over our competitors; local economic and labor conditions, political instability, unexpected regulatory changes, trade protection measures, tax laws, copyright levies and fluctuations in foreign currency exchange rates; our ability to accurately predict product, customer and geographic sales mix sales mix See product mix. and seasonal sales trends; information technology and manufacturing infrastructure failures; our ability to effectively manage periodic product transitions; our reliance on third-party suppliers for quality product components, including reliance on several single-source or limited-source suppliers; our ability to access the capital markets; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and governmental investigations or proceedings arising out of or related to accounting and financial reporting matters; our acquisition of other companies; our ability to properly manage the distribution of our products and services; effective hedging of our exposure to fluctuations in foreign currency exchange rates and interest rates; obtaining licenses to intellectual property developed by others on commercially reasonable and competitive terms; our ability to attract, retain and motivate key personnel; loss of government contracts; expiration of tax holidays or favorable tax rate structures; changing environmental laws; and the effect of armed hostilities, terrorism, natural disasters and public health issues. Additional discussion of factors affecting Dell's business and prospects is contained in Dell's periodic filings with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] |
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