Slide 1: Dell Services presentation, December 16, 2009
1 Brian Gladden Steve Schuckenbrock Senior Vice President and CFO President, Large Enterprise Peter Altabef Paul Bell President, Dell Services President, Public December 16, 2009
Slide 2: Safe Harbor
2 Safe Harbor Statements in this presentation that relate to future results and events (including statements about our future financial and operating performance, anticipated purchase accounting impacts, and any statements of the plans, strategies and objectives of management for future operations,
Slide 3: Dell Services: Dell & Perot Systems
3 Dell SERVICES Dell & PEROT SYSTEMS Peter Altabef President, Dell Services
Slide 4: Our view of the opportunity: large, yet fragmented industry
4 Our view of the opportunity… Large, yet fragmented industry IT is now embedded in the business cycle 3 – 4% of GDP and subject to ups & downsIndustry remains fragmented 90 companies with IT services revenues >$1 billion Only four companies offer a set of integrated service offerings And only one o
Slide 5: Need to move the needle on labor efficiency
5 Our view of the opportunity… Need to move the needle on labor efficiency More than 50% of IT budgets are spent on maintenance and labor Dell’s innovations in server, storage, and services solutions are focused on reducing maintenance and labor costs Competition requires adaptation to different ser
Slide 6: The Dell approach to services
6 The Dell approach to services Redefining services delivery Modular Less labor—more automation Consistently delivered globally Service ready hardware that saves customers money Domain knowledge to deliver business outcomes Industry best practices and global standards that yield process improvements
Slide 7: Why Dell and Perot Systems: strengths
7 Dell Strengths Configuration Deployment Modular Svcs Support Perot Systems Strengths Applications Data Center Industry Solutions Consulting IT Outsourcing 2.5+ million desktops under management Deploy over 4 million systems annually Global infrastructure supporting the delivery of over 13 million
Slide 8: Dell's Integrated Portfolio
8 Dell’s Integrated Portfolio Comprehensive set of enhanced service offerings Support Services Extended Warranty Enhanced Support Managed Services End User Data Center Network Information Assurance Hosting Software/Infrastructure ‘as-a-Service’ Client Software Desktop Servers and Storage Enterprise
Slide 9: Strength of our Combined Business Model
9 Dell Services Strength of our Combined Business Model Intense Customer Focus Domain-Knowledge Breadth of Services Global Delivery Model Recurring Revenue Attribute Description Strong customer heritage of both companies focused on the delivering best-value solutions Large Enterprise, Government and
Slide 10: Dell Enhanced Services $7.5B Global Services Business
10 Dell Enhanced Services $7.5B Global Services Business Revenue Composition $7.5B revenue (3Q Annualized Revenue) (future contracted revenue) $5.9B in deferred revenue 42,000 total headcount 38% of headcount in low-cost geographies Supporting nearly 15 million systems Managing over 2 million seats
Slide 11: Dell Services Public
11 Dell Services Public Paul Bell President, Public
Slide 12: Dell Services – Public: Broadening Industry and Solutions Portfolio
12 Dell Services – Public Broadening Industry and Solutions Portfolio Civilian Defense Education Homeland Security Intelligence State and Local Health Information Exchanges Health Insurance Connectors Health Insurance Hospitals Life Sciences Pharmaceutical Physicians Business Processes Continuity of
Slide 13: Dell Perot Systems Healthcare Solutions
13 Dell Perot Systems Healthcare Solutions to help improve patient care Puts technology in the hands of healthcare professionals at the point of care Improves clinical decision-making and efficiency Single sign-on, fast log in On-demand desktop streaming Dedicated remote workstation End-to-end imple
Slide 14: Dell Services Large Enterprise
14 Dell Services Large Enterprise Steve Schuckenbrock President, Large Enterprise
Slide 15: Large Enterprise Pipeline
15 Large Enterprise Pipeline Focused on capturing white space Excellent reference accounts, but need to scale and double the size of opportunities Now formalizing capture of pipeline for Large Enterprise Customers are shifting to smaller and shorter deals focused on customer cost savings Average tot
Slide 16: Dell's Integrated Portfolio: Large Enterprise focus
16 Dell’s Integrated Portfolio Large Enterprise focus on extended services Support Services Extended Warranty Enhanced Support Managed Services End User Data Center Network Information Assurance Hosting Software / Intrastructure ‘as-a-Service’ Client Software Desktop Servers and Storage Enterprise M
Slide 17: Dell Services – Large Enterprise
17 Dell Services – Large Enterprise Excellent capabilities, But need to scale Consumer Packaging Consumer Products and Retail Energy Freight and Logistics Manufacturing Technology Telecommunications and Mobility Travel and Transport Commercial Capital Markets Commercial and Retail Banking Insurance
Slide 18: Dell Services Financial Implications
18 Dell Services Financial Implications Brian Gladden Senior Vice President and CFO
Slide 19: Perot Integration Plan
19 Perot Integration Plan A model we will be using for future acquisitions GOVERNANCE Integration steering committee owned by CEO’s leadership team Alignment of objectives and incentives EXECUTION ON VISION / SYNERGIES Synergy execution plans in process (30-60-90 day targets) Key integration metrics
Slide 20: Combined Enhanced Services Growth: $650M Revenue Synergies
20 Combined Enhanced Services Growth $650M Revenue Synergies Go-to-Market Opportunities Short term – quick-start opportunities Cross-selling of existing solutions Elimination of margin stacking Pass-thru HW and support Medium term – vertical growthHealthcare – Electronic Health Records; will ramp sh
Slide 21: Cost Synergies
21 Cost Synergies Targeting $300M+ in combined Cost Reductions IT consolidation savings related to Dell’s corporate infrastructure and applications Opex reductions related to eliminating duplicate functions within G&A Other purchasing and services delivery costs Savings continue to be validated via
Slide 22: Financial Implications: Purchase Accounting
22 Financial Implications Purchase Accounting Perot Systems related items* Goodwill of $2.3-2.6B will appear on balance sheet Intangible assets of $1.1-1.3B Amortization of purchased intangibles will be roughly $40-50M per quarter in year one Acquisition related expenses will be $120-130M in Q4, and
Slide 23: Financial Implications: 4Q'10 consolidation of Perot Systems
23 Financial Implications Dell’s 4Q’10 results will consolidate Perot Systems results Approximately 72% of quarterly revenue comes from backlog Expect revenue similar to 9/30 results, though Perot typically sees some seasonal softness in the fourth quarter Accretive in year-one on a non-GAAP basis T
Slide 24: Supplemental Non-GAAP measures
24 Supplemental Non-GAAP measures Definition* Non-GAAP financial measures exclude the effects of the following items from GAAP net income and GAAP earnings per share Amortization of purchased intangible assets Organizational effectiveness actions Acquisition related costs * A detailed discussion of
Slide 25: Supplemental Non-GAAP Measures: Consolidated Dell Results
25 Supplemental Non-GAAP Measures Consolidated Dell Results The following table sets forth, for the fiscal periods presented, a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. 4Q’10 estimates are based on preliminary information subject to ch
Slide 26: Balance Liquidity, Profit & Growth
26 Balance Liquidity, Profit & Growth LONG-TERM VALUE CREATION Improve Core Business – $4B cost savings (including client reinvention) – Improvements to Dell.com – Deepening relationships in customer BU’s 2) Shift Portfolio to high-margin and recurring revenue offerings – Differentiated view of how
Slide 27: Dell Investor Relations
Dell Investor Relations
Slide 28: Summary
28 Summary Dell Services is… A top 10 global service provider Only one of 4 integrated service providersFocused on improving labor efficiency and reducing costRedefining services delivery by making them modular, easier to access, and simpler to managePositioned in key verticals with compelling growt