Exhibit 99.1
Dell Reports Preliminary Revenue of $14.4 Billion;
Preliminary Earnings Per Share of $0.30
AMD Now Shipping Across Full Product Line
ROUND ROCK, Texas--(BUSINESS WIRE)--Nov. 21, 2006--Dell
(NASDAQ:DELL) reported preliminary results for the third quarter of
fiscal year 2007, with revenue of $14.4 billion, operating income of
$824 million, and earnings per share of $0.30. Dell ended the quarter
with $11.6 billion in cash and investments. Commercial paper
outstanding at the end of the quarter totaled $236 million. The
company suspended its share repurchase program in mid-September and,
therefore, only spent $335 million to repurchase 15 million shares.
Investigation Update; Preliminary Results Subject to Change
As previously announced, the U.S. Securities and Exchange
Commission (SEC) and the Company's Audit Committee are conducting
investigations into certain accounting and financial reporting
matters, including the possibility of misstatements in prior period
financial reports, and the company previously received a related
subpoena from the United States Attorney for the Southern District of
New York. Due to questions raised in connection with these ongoing
investigations, the Company has not filed the Form 10-Q for its fiscal
second quarter ended August 4, 2006 and does not expect to be able to
timely file its Form 10-Q for the fiscal third quarter ended November
3, 2006. As a result, all financial results described in this press
release, as well as the previously announced financial results for the
second quarter, 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 is in a position to complete these filings. In addition, the
preliminary results for the second and third quarters could be
affected by any restatements of prior period financial statements that
are required as a result of any conclusions reached by the
investigations. No determination has been made as to whether
restatements of prior period financial statements will be required.
The company is not currently able to predict the extent or
significance of any such changes, and those changes could materially
affect the preliminary results reported herein, as well as the
previously announced results for the second quarter.
Additional information about the investigations, as well as
information about related private litigation, can be found in the
Current Report on Form 8-K filed with the SEC concurrent with the
issuance of this press release.
Summary of Third Quarter Results
In the quarter, the company achieved a better balance of
liquidity, profitability and growth, which was driven by an improved
mix of products worldwide. In addition, the company continued to focus
its actions to strengthen product lines, particularly in the
enterprise, improve customer experience, and accelerate growth outside
the U.S.
Desktop to Data Center; Broadest Product Portfolio in Dell's
History
Dell began shipping two new PowerEdge servers featuring AMD
Opteron processors, providing customers an additional choice for
high-performance two-socket and four-socket systems. The company also
launched the industry's first standards-based Quad-Core processors for
two-socket blade, rack and tower servers. Combined with the 9G servers
launched last quarter with Intel Xeon 5100 series processors, Dell now
provides the broadest selection of industry-standard servers in its
history. In the quarter, server revenue was $1.5 billion on 12 percent
unit growth.
In storage, revenue was $577 million and the company announced a
five-year extension to its partnership with EMC.
In client systems, the company launched quad core processors on
its XPS 710 Extreme desktop as well as on Dell Precision workstations.
In addition, the company launched its 64-bit dual core Dimension and
OptiPlex systems, and Dell Latitude and Inspiron notebooks featuring
AMD processors.
Mobility revenue was $3.9 billion on 17 percent unit growth.
Desktop revenue was $4.7 billion on negative 5 percent unit growth. In
both cases, growth was impacted by the company's decision to focus on
more profitable products.
In software and peripherals, revenue was $2.3 billion. Enhanced
services revenue was $1.4 billion. The company's new Platinum Plus
offering drove an increase in premium service contracts year-over-year
and the company now has more than 300 Platinum Plus customers.
Strong Unit Growth in APJ and Emerging Markets
In the Asia-Pacific and Japan region, revenue was $1.9 billion on
unit growth of 23 percent, as the company gained 1.4 share points
year-over-year. Led by 33 percent unit growth in China, Dell was also
the fastest growing among the top five vendors in the region, growing
at nearly three times the growth rate of the industry. In India, units
were up 93 percent and to more efficiently serve the growth in this
market, Dell plans to open manufacturing operations there early next
year.
In Europe, Middle East and Africa (EMEA), where the company took a
more balanced approach to pricing, revenue was $3.3 billion with unit
growth of 9 percent. Dell also recently announced its second
manufacturing location for EMEA to be located in Lodz, Poland, to
provide more timely delivery to customers in Central and Eastern
Europe.
In the Americas, revenue was $9.2 billion on unit growth of
negative 4 percent. Unit growth was 37 percent in Brazil and 19
percent in Canada.
Customer Experience Improvement Led by "Resolve in One"
As previously announced the company is investing an incremental
$150 million this year on its Customer Experience initiatives and is
seeing signs of improvement in key external and internal indicators.
By increasing the number of agents, average hold times for U.S.
customers have been reduced from nine minutes to three minutes in the
past year. In addition, the company has reduced call transfers by over
30 percent and has improved first contact resolution rates by 20
percent. "Resolve in One" reflects Dell's goal to resolve issues to a
customer's satisfaction on initial contact.
Company Outlook
The company said that the actions it has taken to drive improved
operating and financial performance long-term with a better balance of
liquidity, profitability and growth are starting to take hold.
However, in the near term, improvement in growth and profitability may
not be linear due to a variety of factors, including the timing of
continued investments in Customer Experience, global expansion, and
new product introductions, as well as a muted seasonal uplift due to
changes in the mix of product and regional profit. In addition, the
fourth quarter of fiscal year 2006 included one extra week.
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 sells more systems globally
than any computer company, placing it No. 25 on the Fortune 500. For
more information, visit www.dell.com. To get Dell news direct, visit
www.dell.com/RSS.
Special Note
Statements in this press release that relate to future results and
events (including statements about Dell's preliminary and estimated
financial and operating performance) are forward-looking statements
based on Dell's current expectations. Actual results may differ
materially from those estimated in these forward-looking statements
because of a number of risks and uncertainties, including: general
economic, business and industry conditions; the level and intensity of
competition in the technology industry and the pricing pressures that
have resulted; the outcome of the ongoing investigations into certain
accounting and financial reporting matters that could result in
management's determination that restatement of the company's prior
period financial statements is required; the outcome of the ongoing
investigations into certain accounting and financial reporting matters
that could result in management's conclusion that there is a material
weakness in the company's internal controls over financial reporting,
and that disclosure controls and procedures are not effective; Dell's
failure to meet NASDAQ requirements for continued listing as a result
of its delayed quarterly report filings; litigation and governmental
investigations or proceedings arising out of or related to accounting
and financial reporting matters, or any restatement of Dell's
financial statements; local economic and labor conditions, political
instability, unexpected regulatory changes, trade protection measures,
tax laws, copyright levies and fluctuations in foreign currency
exchange rates; the ability to accurately predict product, customer
and geographic sales mix; the ability to timely and effectively manage
periodic product transitions; reliance on third-party suppliers for
product components, including dependence on several single-source
supplier relationships; the ability to effectively manage operating
costs; the ability to attract and retain qualified personnel; the
level of demand for the products and services Dell offers; the ability
to manage inventory levels to minimize excess inventory, declining
inventory values and obsolescence; and the effect of armed
hostilities, terrorism, natural disasters and public health issues on
the economy generally, on the level of demand for Dell's products and
services and on Dell's ability to manage its supply and delivery
logistics in such an environment. Additional discussion of these and
other factors affecting Dell's business and prospects is contained in
Dell's periodic filings with the Securities and Exchange Commission.
Condensed consolidated statement of income and related financial
highlights 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 - PRELIMINARY (see Note)
(in millions, except per share data or as otherwise noted)
(unaudited)
Three Months Ended
November 3,
2006 (a)
---------------------
Net revenue $14,383
Cost of revenue 11,932
---------------------
Gross margin 2,451
Total operating expenses 1,627
---------------------
Operating income 824
Investment and other income, net 64
---------------------
Income before income taxes 888
Income tax provision 211
---------------------
Net income $677
=====================
Earnings per common share:
Basic $0.30
=====================
Diluted $0.30
=====================
Weighted average shares outstanding:
Basic 2,229
Diluted 2,238
Percentage of Total Net Revenue:
- ------------------------------------------------
Gross margin 17.0%
Operating expenses 11.3%
Operating income 5.7%
Income before income taxes 6.2%
Net income 4.7%
Income tax rate 23.8%
Net Revenue by Geographic Region (in billions):
- ------------------------------------------------
Americas $9.2
Europe 3.3
Asia Pacific - Japan 1.9
Percentage of Total Net Revenue:
- ------------------------------------------------
Americas 64%
Europe 23%
Asia Pacific - Japan 13%
Net Revenue by Product Category (in billions):
- ------------------------------------------------
Desktop PCs $4.7
Mobility 3.9
Servers and Networking 1.5
Storage 0.6
Enhanced Services 1.4
Software and Peripherals 2.3
Percentage of Total Net Revenue:
- ------------------------------------------------
Desktop PCs 32%
Mobility 27%
Servers and Networking 11%
Storage 4%
Enhanced Services 10%
Software and Peripherals 16%
Note: These preliminary results 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's
financial statements for the second and third quarters are finalized.
In addition, these preliminary results could be affected by any
restatements of prior period financial statements that are required as
a result of any conclusions reached by the ongoing investigations
concerning certain accounting and financial reporting matters. See
"Investigation Update; Preliminary Results Subject to Change" in the
accompanying press release.
(a) Results for the three months ended November 3, 2006 include
stock-based compensation expense of $71 million, or $49 million ($0.02
per share) net of tax, due to the implementation of Statement of
Financial Accounting Standard No. 123 (revised 2004) Share-Based
Payments, ("SFAS 123(R)"). Dell implemented SFAS 123(R) using the
modified prospective method effective February 4, 2006.
DELL INC.
Financial Highlights -- Continued - PRELIMINARY (see Note)
(unaudited)
November 3,
2006
----------------
Ratios:
- -----------------------------------------------------
Days supply in inventory 5
Days of sales outstanding (a) 33
Days in accounts payable 78
----------------
Cash conversion cycle (40)
Other Information:
- -----------------------------------------------------
Headcount (approximate) 78,700
Average total revenue/unit (approximate) $1,530
Cash and investments (in billions) $11.6
Commercial paper borrowings (in billions) $0.2
Ratios are calculated based on underlying data in
thousands.
Note: These preliminary results 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's
financial statements for the second and third quarters are finalized.
In addition, these preliminary results could be affected by any
restatements of prior period financial statements that are required as
a result of any conclusions reached by the ongoing investigations
concerning certain accounting and financial reporting matters. See
"Investigation Update; Preliminary Results Subject to Change" in the
accompanying press release.
(a) Days of sales outstanding include the effect of product costs
related to customer shipments not yet recognized as revenue that are
classified in other current assets. At November 3, 2006, days of sales
in accounts receivable and days of customer shipment not yet
recognized were 30 and 3 days, respectively.
CONTACT: Dell Inc., Round Rock
Media Contact:
Bob Pearson, 512-728-3256
bob_pearson@dell.com
or
Investor Contacts:
Lynn A. Tyson, 512-723-1130
lynn_tyson@dell.com
or
Robert Williams, 512-728-7570
robert_williams@dell.com