Dell 8-K Sharp Cost Reductions and Operational Execution Highlight Dell’s Fiscal Fourth-Quarter Results

Exhibit 99.1

Sharp Cost Reductions and Operational Execution Highlight Dell’s Fiscal Fourth-Quarter Results

• Q4 Operating Expenses Down $363 Million Year-Over-Year
• Cash Flow from Operations $729 Million, Nearly $2 Billion for Full Year
• Company Raises Fiscal 2011 Cost-Reduction Goal from $3 Billion to $4 Billion

ROUND ROCK, Texas--(BUSINESS WIRE)--February 26, 2009--Dell today said it achieved solid operating results in the midst of a global downturn in IT spending, as it announced fiscal fourth-quarter results that included a 16-percent year-over-year reduction in operating expenses, along with solid cash flow from operations.

Revenue for the quarter ended Jan. 30 was $13.4 billion, a decline of 16 percent. Earnings per share were 18 cents, which includes previously announced pretax expenses of $277 million or 11 cents per share. The expenses consisted of $134 million in organizational effectiveness and $143 million related to stock-based compensation. Operating expenses were down $363 million from the same quarter a year ago and cash flow from operations for the quarter was $729 million.

Revenue for all of fiscal 2009 was $61.1 billion; full-year earnings were $1.25 per share.

	Fourth Quarter			Fiscal Year
(in millions, except share data)	FY09	FY08	Change	FY09	FY08	Change
Revenue	$13,428	$15,989	(16%)	$61,101	$61,133	0%
Operating Income	$457	$776	(41%)	$3,190	$3,440	(7%)
Net Income	$351	$679	(48%)	$2,478	$2,947	(16%)
EPS	$0.18	$0.31	(42%)	$1.25	$1.31	(5%)
All growth rates in this release are year-over-year unless otherwise noted.

“Customers know they need information technology, and we think we’re best able to help them use IT to improve productivity,” said Michael Dell, chairman and chief executive officer. “But a lot of IT spending is being deferred until there’s better economic visibility.

“Within our business, we’re being very disciplined in managing costs, generating profitability and cash flow, and investing in ways that separate Dell from others today and when the economy inevitably improves.”

Mr. Dell said that for the past 18 months, the company has been sharpening customer focus, redefining priorities, and speeding decisions and actions. It has also prioritized five growth initiatives – notebooks, enterprise technologies, consumers, small and medium businesses, and emerging countries – and achieved a number of successes in those areas, including:

• Producing its best-ever enterprise and mobility products, overall winning more than 420 product and design awards last year;
• Providing customers broader access to Dell technology through retail and commercial channel partners;
• Improving profitability in the consumer business; and,
• Growing faster than industry rates in the world’s most rapidly expanding economies.

As announced on Dec. 31, the company is organizing into four, customer-centered global business units – Large Enterprise, Public, Small and Medium Business, and Consumer – to better meet customer and partner requirements through direct relationships, and to innovate without ties to costly, complex legacy technology.

The company’s cost reductions along the way have been significant.

“We said last March that we would reduce costs by $3 billion annually by the end of fiscal 2011,” said Brian Gladden, Dell’s chief financial officer. “The cost actions we took this past year made us more competitive and delivered value to customers in a challenging economic environment.

“In fact, we now have a clear view to additional opportunities, and are raising our cost-reduction target to $4 billion.”

Many of those actions have occurred since Dell first identified slowing IT-industry spending in the U.S. a year ago. Deferred spending has increased and spread worldwide, significantly affecting overall fourth quarter demand across all regions and customer segments.

Revenue for the quarter in Dell’s Americas Commercial business was $6 billion, a 17-percent decline on a 23-percent decrease in units. Dell continued to be the No. 1 computer-systems provider in the Americas, where demand was down significantly among all customers, particularly small and medium businesses and largest corporate customers. For the full fiscal year, revenue was $28.6 billion, a 5-percent decline.

EMEA Commercial revenue was $3 billion for the quarter, a 17-percent decline. Product shipments for the quarter were down 19 percent as softness in demand spread to emerging countries. For the full fiscal-year 2009, revenue was $13.6 billion, essentially flat from the previous year.

Revenue for Dell’s APJ Commercial business was $1.4 billion for the quarter, a 24-percent decline on a 19-percent decrease in shipments, as growth slowed in key countries including China and India. For the full year, revenue increased 2 percent to $7.3 billion.

Global Consumer achieved a shipment increase of 18 percent and increased global share to nearly 9 percent. With more consumers choosing lower-priced notebooks and desktops, revenue declined 7 percent to $3 billion. Full-year revenue increased 11 percent to $11.5 billion. The company continues to expand its retail reach worldwide and now has its growing range of products in more than 24,000 outlets.

Company Outlook

Dell believes that global IT end-user demand will continue to be uncertain and challenging. The company will maintain its focus on areas that it can control, especially those that benefit customers, including product quality, services and costs. Dell’s new global organization aligns the company even more closely with different types of customers, to best understand and efficiently act on their needs. Dell will continue to manage its mix of products and services to optimize liquidity, profitability and growth. The company expects to absorb organizational effectiveness expenses in the first quarter of fiscal 2010 at a similar level as in Q4, as Dell further streamlines its business to improve competitiveness.

About Dell

Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology and services they need and value. For more information, visit www.dell.com. To hear a replay of the fourth quarter analysts’ call with Michael Dell, chairman and CEO, and Brian Gladden, CFO, go to www.dell.com/investor, or to communicate directly with Dell, go to www.dell.com/dellshares.

Special Note:

Statements in this press release that relate to future results and events (including statements about our future financial and operating performance) are forward-looking statements based on Dell's current expectations. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: weakening global economic conditions and instability in financial markets; our ability to reestablish a cost advantage over our competitors; our ability to generate substantial non-U.S. net revenue; our ability to accurately predict product, customer and geographic sales mix and seasonal sales trends; information technology and manufacturing infrastructure failures and breaches in data security; our ability to effectively manage periodic product transitions; disruptions in component or product availability; our reliance on vendors for quality product components, including reliance on several single-source or limited-source suppliers; our ability to access the capital markets; risks relating to our internal controls; unfavorable results of legal proceedings; our acquisition of other companies; our ability to properly manage the distribution of our products and services; the success of our cost-cutting measures; effective hedging of our exposure to fluctuations in foreign currency exchange rates and interest rates; counterparty default risks; 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. For a discussion of those and other factors affecting our business and prospects, see Dell’s periodic filings with the Securities and Exchange Commission. We assume no obligation to update forward-looking statements.

Consolidated statements of income, financial position and cash flows follow.

Dell is a trademark of Dell Inc.

Dell disclaims any proprietary interest in the marks and names of others.

DELL INC.
Condensed Consolidated Statement of Income and Related Financial Highlights
(in millions, except per share data)
(unaudited)
			Three Months Ended						% Growth Rates
			January 30,		October 31,		February 1,
			2009		2008		2008		Sequential	Yr. to Yr.
Net revenue			$	13,428	$	15,162	$	15,989	(11%)	(16%)
Cost of revenue				11,116		12,309		12,995	(10%)	(14%)
		Gross margin		2,312		2,853		2,994	(19%)	(23%)
Selling, general and administrative				1,679		1,671		1,981	1%	(15%)
Research and Development:
	Research, development and engineering			176		167		154	6%	14%
	In-process research and development			-		-		83	N/A	N/A
	Total research and development			176		167		237	6%	(26%)
		Total operating expenses		1,855		1,838		2,218	1%	(16%)
		Operating income		457		1,015		776	(55%)	(41%)
Investment and other income, net				(3)		(6)		106	47%	(103%)
Income before income taxes				454		1,009		882	(55%)	(49%)
Income tax provision				103		282		203	(64%)	(49%)
		Net income	$	351	$	727	$	679	(52%)	(48%)
Earnings per common share:
		Basic	$	0.18	$	0.37	$	0.31	(51%)	(42%)
		Diluted	$	0.18	$	0.37	$	0.31	(51%)	(42%)
Weighted average shares outstanding:
		Basic		1,944		1,953		2,184	(0%)	(11%)
		Diluted		1,948		1,957		2,201	(0%)	(11%)
Percentage of Total Net Revenue:
Gross margin				17.2%		18.8%		18.8%
Selling, general and administrative				12.5%		11.0%		12.4%
Total research and development				1.3%		1.1%		1.5%
Operating expenses				13.8%		12.1%		13.9%
Operating income				3.4%		6.7%		4.9%
Income before income taxes				3.4%		6.7%		5.5%
Net income				2.6%		4.8%		4.2%
Income tax rate				22.6%		28.0%		23.0%
Net Revenue by Product Category:
Mobility			$	4,014	$	4,849	$	4,813	(17%)	(17%)
Desktop PCs				3,532		4,083		4,860	(13%)	(27%)
Software and Peripherals				2,487		2,586		2,654	(4%)	(6%)
Servers and Networking				1,347		1,573		1,612	(14%)	(16%)
Services				1,356		1,449		1,401	(6%)	(3%)
Storage				692		622		649	11%	7%
Percentage of Total Net Revenue:
Mobility				30%		32%		30%
Desktop PCs				26%		27%		30%
Software and Peripherals				19%		17%		17%
Servers and Networking				10%		10%		10%
Services				10%		10%		9%
Storage				5%		4%		4%
Net Revenue by Geographic Region:
Americas Commercial			$	5,991	$	7,229	$	7,216	(17%)	(17%)
EMEA Commercial				3,036		3,272		3,680	(7%)	(17%)
Asia Pacific - Japan Commercial				1,445		1,818		1,905	(21%)	(24%)
Global Consumer				2,956		2,843		3,188	4%	(7%)
	Consolidated net revenue		$	13,428	$	15,162	$	15,989
Percentage of Total Net Revenue:
Americas Commercial				45%		48%		45%
EMEA Commercial				22%		21%		23%
Asia Pacific - Japan Commercial				11%		12%		12%
Global Consumer				22%		19%		20%
Consolidated Operating Income
Americas Commercial			$	517	$	763	$	502
EMEA Commercial				135		116		283
Asia Pacific - Japan Commercial				47		123		120
Global Consumer				1		112		3
	Consolidated segment operating income			700		1,114		908
	Stock-based compensation expense			(217)		(73)		(38)
	In-process research and development			-		-		(83)
	Amortization of intangible assets			(26)		(26)		(11)
	Consolidated operating income		$	457	$	1,015	$	776
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.

	DELL INC.
	Condensed Consolidated Statement of Operations and Related Financial Highlights
	(in millions, except per share data)
	(unaudited)
				Fiscal Year Ended				% Growth
				January 30,		February 1,		Rates
				2009		2008		Yr. to Yr.
Net revenue				$	61,101	$	61,133	(0%)
Cost of revenue					50,144		49,462	1%
		Gross margin			10,957		11,671	(6%)
Selling, general and administrative					7,102		7,538	(6%)
Research and Development:
	Research, development and engineering				663		610	9%
	In-process research and development				2		83	(98%)
	Total research and development				665		693	(4%)
		Total operating expenses			7,767		8,231	(6%)
		Operating income			3,190		3,440	(7%)
Investment and other income, net					134		387	(65%)
Income before income taxes					3,324		3,827	(13%)
Income tax provision					846		880	(4%)
		Net income		$	2,478	$	2,947	(16%)
Earnings per common share:
		Basic		$	1.25	$	1.33	(6%)
		Diluted		$	1.25	$	1.31	(5%)
Weighted average shares outstanding:
		Basic			1,980		2,223	(11%)
		Diluted			1,986		2,247	(12%)
	Percentage of Total Net Revenue:
	Gross margin				17.9%		19.1%
	Selling, general and administrative				11.6%		12.4%
	Total research and development				1.1%		1.1%
	Operating expenses				12.7%		13.5%
	Operating income				5.2%		5.6%
	Income before income taxes				5.4%		6.3%
	Net income				4.1%		4.8%
	Income tax rate				25.4%		23.0%
	Net Revenue by Product Category:
	Mobility			$	18,638	$	17,423	7%
	Desktop PCs				17,244		19,573	(12%)
	Software and Peripherals				10,603		9,908	7%
	Servers and Networking				6,275		6,474	(3%)
	Services				5,715		5,320	7%
	Storage				2,626		2,435	8%
	Percentage of Total Net Revenue:
	Mobility				31%		28%
	Desktop PCs				29%		32%
	Software and Peripherals				17%		16%
	Servers and Networking				10%		11%
	Services				9%		9%
	Storage				4%		4%
	Net Revenue by Geographic Region:
	Americas Commercial			$	28,614	$	29,981	(5%)
	EMEA Commercial				13,617		13,607	0%
	Asia Pacific - Japan Commercial				7,341		7,167	2%
	Global Consumer				11,529		10,378	11%
			Consolidated net revenue	$	61,101	$	61,133
	Percentage of Total Net Revenue:
	Americas Commercial				47%		49%
	EMEA Commercial				22%		22%
	Asia Pacific - Japan Commercial				12%		12%
	Global Consumer				19%		17%
	Consolidated Operating Income
	Americas Commercial			$	2,568	$	2,566
	EMEA Commercial				544		978
	Asia Pacific - Japan Commercial				458		424
	Global Consumer				143		2
		Consolidated segment operating income			3,713		3,970
		Stock-based compensation expense			(418)		(436)
		In-process research and development			(2)		(83)
		Amortization of intangible assets			(103)		(11)
		Consolidated operating income		$	3,190	$	3,440
	Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.

DELL INC.
Condensed Consolidated Statement of Financial Position and Related Financial Highlights
(in millions, except for "Ratios" and "Other information")
(unaudited)
			January 30,		October 31,		February 1,
			2009		2008		2008
Assets:
Current assets:
	Cash and cash equivalents		$	8,352	$	7,910	$	7,764
	Short-term investments			740		662		208
	Accounts receivable, net			4,731		5,532		5,961
	Financing receivables, net			1,712		1,526		1,732
	Inventories, net			867		1,109		1,180
	Other			3,749		4,795		3,035
		Total current assets		20,151		21,534		19,880
Property, plant and equipment, net				2,277		2,458		2,668
Investments				454		374		1,560
Long-term financing receivables, net				500		435		407
Goodwill				1,737		1,743		1,648
Purchased intangible assets, net				724		750		780
Other non-current assets				657		523		618
		Total assets	$	26,500	$	27,817	$	27,561
Liabilities and Equity:
Current liabilities:
	Short-term debt		$	113	$	266	$	225
	Accounts payable			8,309		9,475		11,492
	Accrued and other			3,788		4,108		4,323
	Short-term deferred service revenue			2,649		2,572		2,486
		Total current liabilities		14,859		16,421		18,526
Long-term debt				1,898		1,851		362
Long-term deferred service revenue				3,000		3,001		2,774
Other non-current liabilities				2,472		2,385		2,070
		Total liabilities		22,229		23,658		23,732
Redeemable common stock				-		-		94
Stockholders' equity				4,271		4,159		3,735
Total liabilities and equity			$	26,500	$	27,817	$	27,561
Ratios:
Days of sales outstanding (1)				35		36		36
Days supply in inventory				7		8		8
Days in accounts payable				67		69		80
Cash conversion cycle				(25)		(25)		(36)
Other Information:
Regular headcount (approximate)				76,500		77,700		82,700
Temporary headcount				2,400		3,100		5,500
Total headcount				78,900		80,800		88,200
Average total revenue/unit (approximate)			$	1,410	$	1,440	$	1,480
Note: Ratios are calculated based on underlying data in thousands.
(1) Days of sales outstanding (“DSO”) is based on the ending net trade receivables and most recent quarterly revenue for each period. DSO includes the effect of product costs related to customer shipments not yet recognized as revenue that are classified in the other current assets. At January 30, 2009, October 31, 2008, and February 1, 2008, DSO and days of customer shipments not yet recognized were 31 and 4 days, 33 and 3 days, and 33 and 3 days, respectively.

DELL INC.
Condensed Consolidated Statements of Cashflows
(in millions, unaudited)
				Three Months Ended						Twelve Months Ended
				January 30,			February 1,			January 30,			February 1,
					2009			2008			2009			2008
Cash flows from operating activities:
	Net income			$	351		$	679		$	2,478		$	2,947
	Adjustments to reconcile net income to net cash provided by
		operating activities:
		Depreciation and amortization			196			183			769			607
		Stock-based compensation			217			38			418			329
		In-process research and development charges			-			83			2			83
		Effects of exchange rate changes on monetary assets and
			liabilities denominated in foreign currencies		(2	)		(10	)		(115	)		30
		Deferred income taxes			(151	)		(222	)		58			(308	)
		Other			94			57			231			121
	Changes in operating assets and liabilities, net of effects from acquisitions:
			Accounts receivable		753			323			591			(990	)
			Financing receivables		(274	)		(210	)		(302	)		(394	)
			Inventories		244			(61	)		309			(498	)
			Other assets		542			157			(106	)		(121	)
			Accounts payable		(1,125	)		(62	)		(3,117	)		837
			Deferred service revenue		187			242			611			1,032
			Accrued and other liabilities		(303	)		-			67			274
			Change in cash from operating activities		729			1,197			1,894			3,949
Cash flows from investing activities:
	Investments:
		Purchases			(434	)		(306	)		(1,584	)		(2,394	)
		Maturities and sales			299			934			2,333			3,679
	Capital expenditures				(39	)		(195	)		(440	)		(831	)
	Proceeds from sale of facility and land				-			-			44			-
	Acquisition of business, net of cash received				(11	)		(2,111	)		(176	)		(2,217	)
			Change in cash from investing activities		(185	)		(1,678	)		177			(1,763	)
Cash flows from financing activities:
	Repurchase of common stock				(1	)		(4,003	)		(2,867	)		(4,004	)
	Issuance of common stock under employee plans				-			115			79			136
	Issuance (payment) of commercial paper, net				(153	)		-			100			(100	)
	Proceeds from issuance of debt				-			28			1,519			66
	Repayments of debt				-			(121	)		(237	)		(165	)
	Other				-			(53	)		-			(53	)
			Change in cash from financing activities		(154	)		(4,034	)		(1,406	)		(4,120	)
Effect of exchange rate changes on cash and cash equivalents					52			43			(77	)		152
Change in cash and cash equivalents					442			(4,472	)		588			(1,782	)
Cash and cash equivalents at beginning of period					7,910			12,236			7,764			9,546
Cash and cash equivalents at end of period				$	8,352		$	7,764		$	8,352		$	7,764

DELL INC.
Supplementary Items
(in millions, except per share data)
(unaudited)
The following supplemental data is provided for additional information.
All items are included in Dell's U.S. GAAP results.
		Three Months Ended January 30, 2009
		Pre-Tax $M			Est. EPS Impact
	Severance & Facility Closures	$	(134	)	$	(0.06	)
	Stock Option Acceleration	$	(104	)	$	(0.04	)
	Stock Award Forfeitures (a)	$	(39	)	$	(0.01	)
		Twelve Months Ended January 30, 2009
		Pre-Tax $M			Est. EPS Impact
	Severance & Facility Closures	$	(282	)	$	(0.12	)
	Stock Option Acceleration	$	(104	)	$	(0.04	)
	Amortization of Purchased Intangibles	$	(103	)	$	(0.03	)
	Investigation Related Costs	$	(43	)	$	(0.01	)
	Exchange Rate Error	$	42		$	0.02
	Reversal of prior year bonus accrual	$	46		$	0.02
	Patent Litigation Reserve	$	55		$	0.02
	(a) Annual true-up of estimated forfeitures related to SFAS No. 123R

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