Slide 1: Dell Q3 FY04 Results
Dell Q3 FY04 Results November 13, 2003 www.dell.com
Slide 2: Special Note
Special Note ! This presentation may contain forward-looking statements, including statements about the outlook and prospects for company and industry growth, as well as statements about the company’s future financial and operating performance. ! These and other statements that relate to future resu
Slide 3: Agenda
Agenda ! Introduction • Lynn A. Tyson, VP of IR ! Financial Results • Jim Schneider, SVP & CFO ! Strategic Direction • Kevin Rollins, President & COO ! Question & Answer ! Close • Michael Dell, Chairman & CEO www.dell.com 3 Investor Relations
Slide 4: Q3 FY04 Overview
Q3 FY04 Overview Dell’s direct model & real-time information flow enable us to move quickly and precisely to deliver outstanding results in any environment ! Revenue, unit and earnings growth outpaced the market • Dell units up 22%; revenue up 16% to $10.6 billion • Industry units up in mid-teens bu
Slide 5: Q3 FY04 Financial Highlights
Q3 FY04 Financial Highlights ! Delivered $0.26 EPS * and $10.6 billion revenue * ! Repurchased 15 million shares of stock LIQUIDITY GROWTH • $1.1 billion in cash flow • Dell units up 22%; from operations mkt ex-Dell up 14% • $11 billion in cash • 16% Rev growth & investments * • 24% EPS growth • CCC
Slide 6: Q3 FY04 Product Summary
Q3 FY04 Product Summary ! Maintained #1 WW share position with 17.2% share ! Particularly strong Enterprise results • Units up 25% • Revenue up 32% with improved operating profits Revenue Unit Growth Growth Product Y/Y Q/Q Y/Y Q/Q Desktops 7% 7% 20% 7% Notebooks 14% 6% 31% 7% Enterprise 32% 11% 25%
Slide 7: Q3 Product Performance: Servers & Storage
Q3 Product Performance: Servers & Storage Servers ! Q3 units up 30% year over year ! WW market share +1.4 pts to 23.2% ! PE 1750 earned PC Magazine’s Editor’s Choice award • Scored a perfect ‘5’ for 1U servers • Based on performance, manageability, and serviceability PowerEdge 1750 Storage ! Ext. st
Slide 8: Q3 Product Performance: Services & Client Systems
Q3 Product Performance: Services & Client Systems Services ! Enhanced services revenue up 31% • $2.6 billion run-rate ! Growth driven by: • Continued share gains in PCs and servers • Higher attach rates of service offerings ! Success punctuated by key customer wins Dell Professional Services Client
Slide 9: Q3 Product Performance: Software & Peripherals
Q3 Product Performance: Software & Peripherals Printers ! Dell printer shipments up nearly 70% Q/Q • Expect units to increase >80% Q/Q in Q4 • Shipped 1 million units to date • Launched W5300n network laser printer • Launched first wave of products in Europe A940 W5300n ! A940 named one of C|Net’s t
Slide 10: Q3 FY04 Region Summary
Q3 FY04 Region Summary Revenue Unit Revenue Op Inc Growth Growth REGION $ millions $ millions Y/Y Q/Q Y/Y Q/Q Americas 5,815 582 14% 6% 17% 1% Business Unit U.S. Consumer 1,695 98 17% 21% 28% 23% Total 7,510 680 15% 9% 20% 6% Americas EMEA 2,048 159 19% 10% 26% 13% APAC/Japan 1,064 73 22% 4% 35% 7%
Slide 11: Q3 Geographic Expansion: Americas
Q3 Geographic Expansion: Americas ! Gained 2.2 pts of share in U.S. • Double digit revenue growth in all customer segments outside of large corporate • Retained #1 spot in all product categories • U.S. market share now 31% ! U.S. SMB units up 22% • Servers up 45%; Notebooks up 27% ! U.S. Public serv
Slide 12: Q3 Geographic Expansion: Europe, Middle East & Africa
Q3 Geographic Expansion: Europe, Middle East & Africa ! Units 26%; revenue up 19% • Shipments up at least 24% in every product category • Operating profits up more than 50% ! #1 TBR Customer Satisfaction for desktops, notebooks & servers in the UK, France and Germany ! UK units up 30%; share up 2.8
Slide 13: Q3 Geographic Expansion: Combined Asia-Pacific/Japan
Q3 Geographic Expansion: Combined Asia-Pacific/Japan ! AP/Japan combined units up 35% • Revenue up 22% • Gained 1.5 pts share ! China units up 59% • Notebooks units up 70%; server units up 67% • Operating profits up >80% ! APAC units up 42%; share up 1.7 pts • Gained share in all form factors • Serv
Slide 14: Q4 FY04 Outlook
Q4 FY04 Outlook Strategy to drive for rapid growth and profitable share gain in all segments, products & regions remains unchanged LIQUIDITY GROWTH PROFITABILITY Q4 FY04 Expectations: ! $11.5 billion revenue; up 18% Y/Y ! Units to be up ~15% sequentially and >25% Y/Y ! Investment and Other Income of
Slide 15: FIN 46: Consolidation of DFS
FIN 46: Consolidation of DFS The consolidation of DFS is an accounting event and did not have a material impact on our operating results or financial position – nor does it change the risk profile of Dell • Income Statement – Given that we have been accounting for DFS under the equity method by reco
Slide 16: Strategic Direction: Timely Information Flow
Strategic Direction: Timely Information Flow Dell’s information flow advantages yield visibility and agility that enable us to precisely adjust to the prevailing market environment faster than anyone else • Manage segment profitability down to the most granular level – Corporate • Track deals and pr
Slide 17: Strategic Direction: Industry Bifurcation
Strategic Direction: Industry Bifurcation The IT market is clearly bifurcating into two successful business models -- standards based & custom solutions based Custom Mixed model Standards focused “in the middle” focused Mixed Model Standards Focused Continue to exceed the Profitability Inconsistent
Slide 18: Strategic Direction: $60B Growth Target
Strategic Direction: $60B Growth Target Dell Revenue by Product $75 B ! Continue to expand beyond PC’s into the broader IT market • Servers: >20% WW market share • Storage: nearly 3x growth in 2 yrs S&P $50 B • Services: continue to grow at multiples of the core business Services • S&P: making great
Slide 19: Summary
Summary ! Model is structurally advantaged • Enables us to consistently deliver exceptional financial and operating performance in all environments ! Focused on growth opportunities • Enterprise products, services, and international markets will drive growth and profitability in the near-term and en
Slide 20: Visit www.dell.com/investor for additional information
Visit www.dell.com/investor for additional information www.dell.com