Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Q1 FY2007 Earnings Presentation
21 slides from Dell Technologies's earnings presentation, May 18, 2006
Slide 1: Dell Q1 FY07 Results
Dell Q1 FY07 Results May 18, 2006
Slide 2: Special Note
Special Note • Statements in this presentation and the accompanying press release and conference call that relate to future results and events (including statements about Dell’s anticipated financial and operating performance) are forward-looking statements based on Dell’s current expectations. • Ac
Slide 3: Q1 FY07 Overview
Q1 FY07 Overview International International and and enterprise enterprise business businessdrove drovegrowth growthin inthe thequarte quarterr • Revenues of $14.2B, an increase of 6%. EPS of $0.331, which includes $0.03 for stock- based compensation, declined 11% • Revenue outside the U.S. increase
Slide 4: Strategic Overview
Strategic Overview • Competitive environment is more intense than we had planned for or acknowledged • In the past, we tried to grow and increase margins which created a margin umbrella for competitors and stalled our growth • We have taken action to reignite growth and reassert the unique value of
Slide 5: Investing in Customer Service, Sales and Support
Investing in Customer Service, Sales and Support • Spending >$100M to regain customer experience leadership • Hired >2000 sales/support people and retraining >5000 • Expanded warranties, scope of services offered and reduced call queue times by >50% • Adding/expanding ten call centers including Otta
Slide 6: Investing in Product and Technology Leadership
Investing in Product and Technology Leadership • Renewed focus on defining, designing and delivering breakthrough innovative products • Launching broadest and highest quality product line ¾ 9th generation servers featuring Intel Woodcrest ¾ AMD Opteron processors in multi-processor servers by the en
Slide 7: Improving Cost Structure and Productivity
Improving Cost Structure and Productivity • Targeted at bringing better value to our customers and improving execution • Accelerating $3B of cost improvements this year including structural material, component, transformation and warranty costs • Merging leadership of contact centers to improve effi
Slide 8: Headroom for Global Growth
Headroom for Global Growth • 95% of the world’s population is outside the U.S., accounting for 70% of the global IT market – Dell has just a 12% share • Dell model is uniquely positioned to provide broad product lines and enhanced services on a global scale • Investing globally including the U.S. an
Slide 9: Q1 FY07 Financial Highlights
Q1 FY07 Financial Highlights Delivered Delivered$14.2 $14.2billion billionof ofrevenue revenueand and$0.33 $0.33ofofEPS EPS Spent Spent$1.7B $1.7Bto torepurchase repurchasealmost almost58 58million millionshares shares LIQUIDITY GROWTH • $1.0 billion cash flow from • Units up 13% operations •
Slide 10: Industry Leading Returns: Free Cash Flow & EPS Trends
Industry Leading Returns Free Cash Flow & EPS Trends $2.00 FCF EPS • Cash flows $1.50 FCF Trend EPS Trend ¾ CFOps of $1.0B Per Share ¾ FCF of $.9B $1.00 ¾ CFOps/share of $0.44 & FCF/share of $0.37 • Strategy is to consistently grow $0.50 FCF/share and EPS faster than Revenue • FCF/share up 26% Y/Y $
Slide 11: Share Repurchase Program Continues to be Accretive
Share Repurchase Program Continues to be Accretive Dell Dellreduced reducedshare sharecount count11% 11%over overlast lasttwo twoyears years Share Buyback $14 2,650 2,600 $12 WAS • Spent $1.7 billion to repurchase almost Cumulative Share Repurchase 2,550 58 million shares Diluted Shares (M) $10 2
Slide 12: Q1 Product Summary
Q1 Product Summary Revenue Revenue Growth Unit Growth Product $B Y/Y Q/Q Y/Y Q/Q Desktop PCs 5.1 -3% -9% 4% -4% Mobility 3.7 12% -4% 36% 0% Servers 1.3 3% -7% 8% 0% Storage 0.5 12% -16% Enhanced Services 1.4 28% 2% S&P 2.2 11% -6% TOTAL $14.2 6% -6% 13% -3% “Desktop PCs” PCs” includes desktops and d
Slide 13: Product Summary: Growth in Servers & Storage
Q1 FY07 Product Summary: Growth in Servers & Storage Total Totalenterprise enterpriseincluding includingservers, servers, storage, storage, services, services,software softwareand and peripherals grew 10% peripherals grew 10% PowerEdge Servers PowerVault™ MD1000 Dell/EMC AX150 Dell/EMC CX3- PowerEdg
Slide 14: Product Summary: Enhanced Services are Growing Rapidly
Q1 FY07 Product Summary: Enhanced Services are Growing Rapidly Deferred Services Revenue 1 • Revenue up 28% to $1.4B $4.0 Balance ($B) ¾ Grew 38% outside of the Americas ¾ Over $5.6B annualized run-rate Provides Annuity Stream of $3.5 Revenue and Profits ¾ Professional, Managed & Deployment Services
Slide 15: Product Summary: Software & Peripherals
Q1 FY07 Product Summary: Software & Peripherals S&P S&P revenue revenue grew grew 11%, 11%, driven driven by by flat flat panel panel displays displays and and imaging imaging Digital Televisions and Monitors • Ranked top worldwide LCD monitor vendor, almost double the next closest vendor – won nume
Slide 16: Product Summary: Strong Growth in Mobility
Q1 FY07 Product Summary: Strong Growth in Mobility • Revenue of $3.7B, up 12% on 36% unit growth • Increased #1 Worldwide Notebook share 0.5% to 17% • Refreshed entire line of notebooks, added Intel Core Duo technology and won numerous awards ¾ XPS M1710: Gaming and high performance ¾ Precision M90:
Slide 17: Product Summary: Leading Edge Technology in Desktop PCs
Q1 FY07 Product Summary: Leading Edge Technology in Desktop PCs • With continuing shift to mobility, Desktop revenue declined 3% to $5.1B, units up 4% • #1 in Worldwide and U.S. share • Expanded use of Intel Dual Core processors OptiPlex 210L OptiPlex GX620 • New OptiPlex 210L for business value • O
Slide 18: Q1 FY07 Regional Summary
Q1 FY07 Regional Summary Op Inc Unit Revenue Op Inc Revenue Growth Growth Growth REGION $M $M Y/Y Q/Q Y/Y Q/Q Y/Y Q/Q Americas 1 8,927 742 4% -8% -8% -14% 7% -7% EMEA 3,357 183 6% -9% -23% -27% 18% -2% APAC/Japan 1,932 136 17% 11% 2% 5% 30% 18% Stock-based compensation - -112 - - NA NA - - expense 2
Slide 19: Geographic Expansion
Q1 FY07 Geographic Expansion Revenue Revenueoutside outsidethe theU.S. U.S.was wasupup12% 12%and andcontributed contributed aarecord record44% 44% of oftotal totalrevenues revenues Revenue Outside of the U.S. • Europe, Middle East & Africa ¾ Units were up 18% and revenues up 6% led by Germany & 46%
Slide 20: Outlook
Outlook • Ending the practice of providing specific quarterly guidance –- will move to a focus on long-term drivers to align with how we manage the business • At our September Analyst Meeting we will discuss the qualitative and quantitative data most relevant to focus on • Suggest Q2 model P&L be mo
Slide 21: Visit www.dell.com/investor for additional information
Visit www.dell.com/investor for additional information