Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Q1 FY04 Earnings Presentation
20 slides from Dell Technologies's earnings presentation, May 15, 2003
Slide 1: Dell Q1 FY04 Results
Dell Q1 FY04 Results May 15, 2003
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 • Standards in the Enterprise ! Michael Dell, Chairman & CEO • Question & Answer ! Michael Dell, Chairman & CEO ! Kevin Rollins, President & COO ! Jim
Slide 4: Q1 FY04 Highlights
Q1 FY04 Highlights " Outperformed the market again • Revenue, unit & earnings growth significantly outpaced mkt • Dell revenues up +18%; industry revenues down >5% • Dell units up +29%; market ex-Dell was down -1% " Accelerated share gains • Regained the #1 WW share position by a 1.2 pt margin • WW
Slide 5: Q1 FY04 Financial Report
Q1 FY04 Financial Report • Delivered $0.23 EPS and $9.5 billion revenue • Repurchased 18 million shares of stock LIQUIDITY GROWTH • $812 million in cash • Dell units +29%, flow from operations market down -1% • $10.3 billion in cash • 18% Rev growth & investments * • 35% EPS growth • CCC -38 days *1
Slide 6: Q1 FY04 Product Summary
Q1 FY04 Product Summary • Regained #1 WW Share position by a 1.2 pt margin • Unit shipments up +29%, market ex-Dell down -1% ! 30% WW growth premium ! Average growth premium over the last 3yrs is >20% ! Highest growth premium in the last two years Revenue Unit Growth Growth Product Y/Y Q/Q Y/Y Q/Q D
Slide 7: Q1 Product Performance: Servers & Storage
Q1 Product Performance: Servers & Storage Servers • WW market share +2.7 pts to 23.4% • Units +40%, market ex-Dell up <10% PowerEdge 2650 • #1 TBR Intel Server Satisfaction Survey ! 7th consecutive quarter ! #1 in every quarter but one since Q1’98 • #1 U.S. Linux share; #2 World Wide PowerEdge 6650
Slide 8: Q1 Product Performance: Services & Client Systems
Q1 Product Performance: Services & Client Systems Workstations • Workstation units +16% • #1 market share U.S, W. Europe and WW Services • Enhanced services (Deployment, Managed & Professional) revs up +45% Dell Professional Services ! >$2 billion run-rate Client Systems • Notebooks units up +31% !
Slide 9: Q1 FY04 Region Summary
Q1 FY04 Region Summary Revenue Unit Revenues Op Inc Growth Growth REGION $ millions $ millions Y/Y Q/Q Y/Y Q/Q Americas 4,965 498 13% 2% 21% 4% Business Unit US Consumer 1,474 93 21% -22% 46% -21% Total 6,439 591 15% -5% 27% -4% Americas EMEA 2,032 141 23% 1% 29% 3% APAC/Japan 1,061 79 32% 8% 40% 11
Slide 10: Q1 Geographic Expansion: Americas
Q1 Geographic Expansion: Americas • Gained nearly 6 pts of share in U.S. ! U.S. shipments up +27% ! Market ex-Dell down -6% • U.S. SMB units +32%; Servers +65% • U.S. Ed/Gov units up +16% ! Servers units up +32% • Consumer units up +46% Y/Y ! Notebook units up +52% • U.S. Corporate units +12% • Amer
Slide 11: Q1 Geographic Expansion: Europe, Middle East & Africa
Q1 Geographic Expansion: Europe, Middle East & Africa • #2 in EMEA; units up +29% ! market ex-Dell up only 4% • Profitability up sequentially and Y/Y • France units +38%; market ex-Dell down -3% ! #2 rank; gained 3.7 share pts • Germany units +16%; market ex-Dell down -3% ! Server units +39%; gained
Slide 12: Q1 Geographic Expansion: Combined Asia-Pacific/Japan
Q1 Geographic Expansion: Combined Asia-Pacific/Japan • Delivered >$1 billion revenue • AP/Japan combined units up 40%; market ex-Dell up only 1% • China units up +67% ! Server units more than doubled • Japan units up +36%; market ex-Dell down -9% ! Notebook units up over 90% • Australia/New Zealand
Slide 13: Q2 FY04 Outlook
Q2 FY04 Outlook Will continue to drive for profitable share gain and outperform the market in all segments, products, and regions LIQUIDITY GROWTH PROFITABILITY Q2 FY04 Guidance • Revenue up approximately 15% Y/Y to more than $9.7 billion • $0.24 EPS; up +26% Y/Y • Units up approximately 25% Y/Y www
Slide 14: Share Repurchase Program Accretive to Earnings
Share Repurchase Program Accretive to Earnings Dell Diluted Weighted Average Shares (M) 3,200 • Repurchased 18M shares in Q1 for $500M 3,100 • Weighted average 3,000 share reduction of -18% since FY96 2,900 • Will continue to offset 2,800 dilution going forward; $500M in systematic 2,700 daily open
Slide 15: IT Market Bifurcation
IT Market Bifurcation Custom Mixed model Standards focused focused Standards Custom Focused Focused Customer Lock-in Flexibility/Scalability proposition Increase Price & Profit approach Profit through scale Margin R&D investments Proprietary technology Leveraged R&D Services as primary Services appr
Slide 16: Dell Market Share & Profitability
Dell Market Share & Profitability As seen in our market share gains and profitability over the past decade, customers have chosen Dell at an increasing rate ! Gained an average of 1.5 pts of share per year 1995-2000: ! Increased operating profits ~50% per year ! Gained an average of 2.3 pts of share
Slide 17: Industry Consolidation
Industry Consolidation • Looking forward, we expect customer demand to continue to concentrate around • Industry standard solutions • Companies with the lowest cost models • Companies that offer the best value proposition • This trend has already forced some consolidation • Two of our largest compet
Slide 18: Operating Income % Q1 Relative Performance
Q1 Relative Performance 30% Operating Income % 20 10 0 $5B Rev -10 -20 -10 0 10 20 30% Revenue Growth Y/Y www.dell.com www.dell.com
Slide 19: Summary
Summary ! Our model is structurally advantaged – consistently deliver exceptional financial and operating performance in all environments ! We are pursuing opportunities – particularly international, enterprise and services – to drive near-term growth & profitability and ensure long-term growth and
Slide 20: Visit www.dell.com/investor for additional information
Visit www.dell.com/investor for additional information