Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Q4 FY04 Earnings Presentation
20 slides from Dell Technologies's earnings presentation, Feb 12, 2004
Slide 1: Dell Q4 FY04 Results
Dell Q4 FY04 Results February 12, 2004 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: FY04 Full Year and Q4 Overview
FY04 Full Year and Q4 Overview Dell’s direct model gives us an unparalleled view into customer demand which allows us to set robust targets designed to yield balanced, profitable growth. Full year FY04 growth exceeded plans • Dell units up 26%; revenue up 17% to $41.4 billion • Operating Income up
Slide 5: Q4 FY04 Financial Highlights
Q4 FY04 Financial Highlights Delivered $0.29 EPS * and $11.5 billion revenue * Repurchased 14 million shares of stock LIQUIDITY GROWTH • $1.1 billion in cash flow • Dell units up 25%; from operations mkt ex-Dell up 15% • $11.9 billion in cash • 18% Rev growth & investments * • 26% EPS growth • C
Slide 6: Q4 FY04 Product Summary
Q4 FY04 Product Summary #1 WW full year unit share position Particularly strong enterprise and notebook results • Enterprise revenue up 32%; 22% of revenue for full year • Notebook revenue up 22%; units up 40% Revenue Unit Growth Growth Product Y/Y Q/Q Y/Y Q/Q Desktops 6% 11% 21% 16% Notebooks 2
Slide 7: Q4 Product Performance: Servers & Storage
Q4 Product Performance: Servers & Storage Servers Q4 units up 40% year over year WW market share +1.5 pts to 23.5% Fastest growth in the top ten WW #1 in US with 32.5% share PowerEdge 1750 Storage Ext. storage revenue up 47%; $1.8B run-rate • Strong performance across all regions and produ
Slide 8: Q4 Product Performance: Services & Client Systems
Q4 Product Performance: Services & Client Systems Services Enhanced services revenue up 35% • $3 billion run-rate Growth driven by: • Continued share gains in PCs and servers • Focus on enterprise services Success punctuated by growth in Europe Dell Professional Services Client Systems Recor
Slide 9: Q4 Product Performance: Software & Peripherals
Q4 Product Performance: Software & Peripherals Printers Dell printer shipments up nearly 100% Q/Q • 2 million units sold to date • Launched A960 AIO inkjet printer • New technology partnerships with Fuji Xerox, Kodak and Samsung A960 W5300n A940 named one of C|Net’s top 100 products & PC Mag’s E
Slide 10: Q4 FY04 Region Summary
Q4 FY04 Region Summary Revenue Unit Revenue Op Inc Growth Growth REGION $ millions $ millions Y/Y Q/Q Y/Y Q/Q Americas 5,614 579 15% -3% 20% 1% Business Unit U.S. Consumer 2,148 119 14% 27% 26% 40% Total 7,762 698 15% 3% 22% 11% Americas EMEA 2,553 192 27% 25% 33% 24% APAC/Japan 1,197 91 22% 12% 34%
Slide 11: Q4 Geographic Expansion: Americas
Q4 Geographic Expansion: Americas Units up 22% • #1 share in all U.S. product categories • U.S. market share now 30% U.S. SMB led with strong performance across all product categories U.S. Corporate units up 11% • Server units up >30% U.S. Consumer units up 26%; revenue up 14% • Notebook uni
Slide 12: Q4 Geographic Expansion: Europe, Middle East & Africa
Q4 Geographic Expansion: Europe, Middle East & Africa Units up 33%; revenue up 27% • Shipments up at least 24% in every product category • Operating profits up >43% #1 TBR Customer Satisfaction for desktops, notebooks & servers in the UK, France and Germany European Business product segments (
Slide 13: Q4 Geographic Expansion: Combined Asia-Pacific/Japan
Q4 Geographic Expansion: Combined Asia-Pacific/Japan AP/Japan combined units up 34% • Revenue up 22%; Op income up >60% • Gained 1.1 pts share China units up 36% • Server units up over 40% APAC units up 40%; share up 1.2 pts • Gained share in all form factors • Server share up 4.7 pts Japan
Slide 14: Q1 FY05 Outlook
Q1 FY05 Outlook Strategy to drive for rapid growth and profitable share gain in all segments, products & regions remains unchanged LIQUIDITY GROWTH PROFITABILITY Q1 FY05 Expectations: Revenue of approximately $11.2 billion; up 17% Y/Y Unit shipments and revenue both decline about 3% sequentially
Slide 15: State of the Industry Improving…
State of the Industry Improving… Observed significant recovery in the PC industry in 2003 20% Six consecutive quarters of Y/Y PC Industry Growth Y/Y growth 15% Early signs of recovery in corporate spending 10% Overall health of the 5% industry is improving Double-digit Y/Y unit 0% growth exp
Slide 16: However, Significant Challenges Remain
However, Significant Challenges Remain Year Over Year PC Industry Unit & Revenue Growth ex-Dell 20% Revenues ex-Dell failed to 15% Y/Y PC Unit Growth grow in 2003 despite unit Y/Y PC Revenue Growth growth near double digits 10% 5% Industry ASP’s down -9% during first 3 quarters of 0% 2003 versus
Slide 17: PC Industry ex-Dell Generating Proforma Operating Losses
PC Industry ex-Dell Generating Proforma Operating Losses Annual PC Industry Opinc Losses & Charges Since 2001 IT sector destroying value $0B • >$12B in losses since 2001 • Dell’s GAAP = pro-forma; -$1B 10th consecutive quarter 2001 2002 2003 Continued charges due to inefficiencies -$3B • Use of
Slide 18: While Dell Direct Model Creates Value, Subsidization Models Destroy Value
While Dell Direct Model Creates Value, Subsidization Models Destroy Value Creating Value Destroying Value Dell Direct Subsidization Model Model • All segments profitable • Happy losing money • Control Value Chain • Outsource control • Direct customer • Multi-step relationships distribution • >$7.5B
Slide 19: Summary
Summary Model is structurally advantaged – strong FY04 full year performance • Record units, revenues, operating profits and earnings per share • Gained share Dell is the most profitable major computer systems company • Generating industry leading returns while subsidy based models continue to i
Slide 20: Visit www.dell.com/investor for additional information
Visit www.dell.com/investor for additional information www.dell.com