Slide 1: Dell Q2 FY04 Results
Dell Q2 FY04 Results August 14, 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: Q2 FY04 Highlights
Q2 FY04 Highlights Outperformed the market again • Revenue, unit and earnings growth outpaced the market • Dell revenue up 16% while industry revenues flat • Dell units up 27%; market ex-Dell up only 6% Continued to profitably gain share • Increased WW share 2.6 pts to 17.5% • Maintained a >20 p
Slide 5: Q2 FY04 Financial Report
Q2 FY04 Financial Report Delivered $0.24 EPS and $9.8 billion revenue * 8th quarter of meeting guidance with GAAP results Repurchased 16 million shares of stock LIQUIDITY GROWTH • $740 million in cash • Dell units up 27%, flow from operations market up 6% • $10.6 billion in cash • 16% Rev grow
Slide 6: Q2 FY04 Product Summary
Q2 FY04 Product Summary Unit shipments up 27%, market ex-Dell up 6% • 21 point WW growth premium Extended #1 WW share position to a 1.6 pt margin • Translates to ~$3 billion in revenue Revenue Unit Growth Growth Product Y/Y Q/Q Y/Y Q/Q Desktops 8% -2% 25% 1% Notebooks 19% 11% 37% 16% Enterprise
Slide 7: Q2 Product Performance: Servers & Storage
Q2 Product Performance: Servers & Storage Servers Q2 units up 27% year over year WW market share +1.8 pts to 23.6% PowerEdge 3250 #1 TBR Intel Server Satisfaction Survey • 8th consecutive quarter • #1 in every quarter but one since Q1’98 PowerEdge 400SC #1 U.S. Linux share; #2 World Wide Sto
Slide 8: Q2 Product Performance: Services & Client Systems
Q2 Product Performance: Services & Client Systems Services Enhanced services (Deployment, Managed & Professional) revenue up 38% • Grew significantly faster than HW business • >$2 billion run-rate Client Systems Notebooks units up 37% • Launched Inspiron 5150; >3Ghz processor Dell Professional S
Slide 9: Q2 FY04 Region Summary
Q2 FY04 Region Summary Revenue Unit Revenue Op Inc Growth Growth REGION $ millions $ millions Y/Y Q/Q Y/Y Q/Q Americas 5,494 535 9% 11% 18% 13% Business Unit U.S. Consumer 1,398 90 28% -5% 47% -7% Total 6,892 625 12% 7% 23% 8% Americas EMEA 1,862 145 22% -8% 31% -8% APAC/Japan 1,024 70 29% -3% 46% 0
Slide 10: Q2 Geographic Expansion: Americas
Q2 Geographic Expansion: Americas Gained >4 pts of share in U.S. • Extended lead to >12 pts of share • U.S. shipments up 23% • Market ex-Dell up <2% Broad-based growth • Servers: gained 2 pts of share • Notebooks: gained >1 pt of share • Desktops: gained almost 6 pts of share U.S. SMB units up
Slide 11: Q2 Geographic Expansion: Europe, Middle East & Africa
Q2 Geographic Expansion: Europe, Middle East & Africa Operating Income up nearly 90% Units >30%; market ex-Dell up 12% • Strengthened #2 ranking by closing gap to #1 by 1.6 share points • Fastest growing company in the top 5 UK share up 3.6 pts; units up 43% • Generated record profits; Op Inc
Slide 12: Q2 Geographic Expansion: Combined Asia-Pacific/Japan
Q2 Geographic Expansion: Combined Asia-Pacific/Japan AP/Japan combined units up 46% • Market ex-Dell up only 6% Operating Income up 30% China operating income up >160% • Units up 71% year over year • Server units up ~80%; believe we have taken the #1 server share position • Notebook units more
Slide 13: Q3 FY04 Outlook
Q3 FY04 Outlook Strategy to drive for rapid growth and profitable share gain in all segments, products & regions remains unchanged LIQUIDITY GROWTH PROFITABILITY Q3 FY04 Expectations: ~$10.5 billion revenue; up 15% Y/Y Units to be up over 10% sequentially and more than 25% Y/Y Investment and O
Slide 14: FIN 46: Consolidation of DFS
FIN 46: Consolidation of DFS In accordance with FASB’s Financial Interpretation No. 46 entitled “Consolidation of Variable Interest Entities”, Dell anticipates it will consolidate Dell Financial Services, the company’s U.S. joint venture with CIT Group Inc., in its fiscal Q3. This is an accounting e
Slide 15: Strategic Direction: Magnitude and Sustainability of Dell's Cost Advantage
Strategic Direction: Magnitude and Sustainability of Dell’s Cost Advantage Dell’s cost advantages are structural, inherent to our model, and no one has been able to duplicate them • Driven by global scale, rapid growth and Manufacturing proprietary practices efficiencies • 2 to 3 point cost advantag
Slide 16: Strategic Direction: High Quality of Earnings & Industry Leading Returns
Strategic Direction: High Quality of Earnings & Industry Leading Returns 50% Return on Total Capital IT sector has continually reduced 40% Trailing 5 Years shareholder value through write-offs 30% and special charges 20% SUNW Since 2002, sector has written off AAPL GTW HPQ 10% IBM ~$10B in charg
Slide 17: Strategic Direction: Harness Efficiency of the Dell Model to Enter New Markets
Strategic Direction: Harness Efficiency of the Dell Model to Enter New Markets The Dell model is advantaged across a broad spectrum of the IT sector Strategic Addressable Market Opportunities Continue to leverage Tier 2 Tier 1 our model to: Strategic Value Key Int’l • Actively pursue large Markets
Slide 18: Summary
Summary Dell Revenue by Product $75 B Stabilization of the IT Market • Regardless, the Dell model is structurally advantaged S&P Standardization is Inevitable $50 B and Accelerating Services • Data center of the future will be based on standard hardware, Server/ software and services Storage • T
Slide 19: Visit www.dell.com/investor for additional information
Visit www.dell.com/investor for additional information www.dell.com