Slide 1: DELL Q4 FY08 Earnings
DELL Q4 FY08 EARNINGS FEBRUARY 28, 2008
Slide 2: Special Note
DELL Q4 FY08 EARNINGS SPECIAL NOTE Statements in this presentation that relate to future results and events (including statements about our expected future financial and operating performance) are forward-looking statements based on our current expectations. p Actual results and events in future p p
Slide 3: Dell Q4 FY08 Overview
DELL Q4 FY08 OVERVIEW Highlights: Progress on five key growth priorities: Consumer, Enterprise, Notebooks, SMB and Emerging Countries – Growth driven by the most robust portfolio of products and services in the company’s company s history – More work to do on improving costs – Multi-billion M lti bi
Slide 4: Q4 FY08 Financial Highlights
Q4 FY08 FINANCIAL HIGHLIGHTS • Delivered $16.0 billion of revenue and $0.31 of EPS • Spent $4.0 billion to repurchase 179 million shares LIQUIDITY GROWTH – $1.2 billion cash flow – Units up 19% from operations – Revenue up 10% – $9.5 billion in cash and – APJ revenue up 28% investments – CCC -36 day
Slide 5: Dell Q4 FY08 Earnings Overview
DELL Q4 FY08 EARNINGS OVERVIEW P&L: – Revenues grew +10% Y/Y to $16.0B – Units +19% Y/Y driven by growth in emerging countries and U.S. Consumer – Operating O ti income i $776M $776M, or 4 4.9% 9% ddue tto strength t th iin mobility, bilit APJ APJ, EMEA and favorable component costs offset by Consum
Slide 6: Dell Q4 FY08 Earnings Overview
DELL Q4 FY08 EARNINGS OVERVIEW P&L: – Operating income and EPS was affected by the following items: $83M expense, expense or $0 $0.04 04 per share, share write-off of in-process research and development resulting from the acquisitions of EqualLogic and Everdream $54M expense, or $0.02 per share,
Slide 7: Cash Flow from Operations
CASH FLOW FROM OPERATIONS CONSISTENTLY GROWING FASTER THAN NET INCOME $B 6 Net Income Cash Flow Ops 5 4 3 2 1 0 FY03 FY04 FY05 FY06 FY07 FY08 Cash Flow and Capital Allocation: – Generated $1.2B cash from operations, $3.9B in FY’08 – In Q4, spent $4.0B on share repurchase and $2.1B on acquisitions, n
Slide 8: Share Repurchase Program Continues to Be Accretive
SHARE REPURCHASE PROGRAM CONTINUES TO BE ACCRETIVE Dell reduced share count 15% over last four years Share Buyback Share Repurchase: 20 2,600 • Resumed share repurchase se e Repurchas WAS program - spentt $4 $4.0B 0B on Diluted Shares (M) 2,500 179M shares Y05 ($B) 15 2,400 Repurchases • Decreased Q
Slide 9: Dell Announced Acquisitions and Spent $2.2B in FY08
DELL ANNOUNCED 8 ACQUISITIONS AND SPENT $2.2B IN FY08 5 Ke Key Priorities Consumer Enterprise Notebooks SMB Emerging •Closed Silverback 7/26/07 - Remote systems mgmt. service Zing 8/13/07 - Always connected entertainment ASAP 11/9/07 - Software license mgmt. service Everdream 12/20/07 - SaaS integra
Slide 10: Deferred Services Revenue Balance Up +25% Y/Y
DEFERRED SERVICES REVENUE BALANCE UP +25% Y/Y Deferred Services Revenue ($B) $6 • Deferred services revenue 22% CAGR b l balance up 25% Y/Y tto $5 $5.3B 3B Provides Annuity Stream of $5 • Services revenue up 7% to $1.4B Revenue and Profits – Grew 15% outside the Americas $4 – FY08 revenues $5.3B $5
Slide 11: FY08 Financial Summary
FY08 FINANCIAL SUMMARY $M FY04 FY05 FY06 FY07 FY08 Revenue 41,327 49,121 55,788 57,420 61,133 Operating Income 3,525 4,206 4,382 3,070 3,440 Net Income 2,625 3,018 3,602 2,583 2,947 EPS $1.00 $1.18 $1.47 $1.14 $1.31 Cash Flow Operations 4,064 5,821 4,751 3,969 3,949 Growth % Y/Y Revenue 17% 19% 14%
Slide 12: Q4 FY08 Regional Summary
Q4 FY08 REGIONAL SUMMARY Revenue Regions: $M Q407 Q108 Q208 Q308 Q408 ABU 7,079 7,512 7,914 8,169 7,549 • Americas Business grew revenues 7% - Consumer 1,747 1,435 1,301 1,527 1,961 conservative spending in global accounts EMEA 3,853 3,765 3,488 3,834 4,180 and financial services, Americas APJ , 1,7
Slide 13: Q4 FY08 Product Summary
Q4 FY08 PRODUCT SUMMARY Revenue Products: $M Q407 Q108 Q208 Q308 Q408 Desktop PCs 4,749 4,942 5,017 4,754 4,860 • Mobility revenue grew +24% Y/Y Mobility 3,885 4,016 3,865 4,729 4,813 driven by a +37% Y/Y increase in units S Servers 1 577 1,593 1,577 1 593 1,618 1 618 1,651 1 651 1,612 1 612 Storage
Slide 14: Global Consumer
FIVE GROWTH PRIORITIES: GLOBAL CONSUMER GROWTH WITH NEW PRODUCT AND CHANNEL EXPANSION • U.S. Consumer revenue up 12% • Successful retail ramp in FY08 – 10,000+ Retail Stores – $1 billion in revenue run-rate • Launched innovative and better XPS ONE CRYSTAL designed products: – Inspiron color notebook
Slide 15: Enterprise
FIVE GROWTH PRIORITIES: ENTERPRISE STANDARDS, IP – STORAGE, VIRTUALIZATION AND POWER & COOLING • Enterprise revenues grew 2% & units 10% • Launched PowerEdge M-Series – industry’s most energy efficient blade server solution • #1 partner with VMWare – stay tuned for an announcement about expanded rel
Slide 16: Notebooks
FIVE GROWTH PRIORITIES: NOTEBOOKS BE THE FASTEST, MOST INNOVATIVE NOTEBOOK PROVIDER IN THE WORLD 5.0 Revenue 100% • Mobility revenues up +24% Y/Y Unit Growth and units up +37% Y/Y 80% Uniit Growth % evenue $B 4.0 • Both revenues and units are 60% increasing again 40% • New consumer and commercial 30
Slide 17: Small and Medium Business (SMB)
FIVE GROWTH PRIORITIES: SMALL AND MEDIUM BUSINESS (SMB) VALUE, SIMPLE & RELIABLE SERVICES, CHANNEL CHOICE 16% Growth Y/Y Dell Global SMB growth • SMB Global Units +17% Y/Y accelerating 11% • $100B+ global business opportunity Global Unit G • Ramping Vostro - customized 6% technology, services and ex
Slide 18: Emerging Countries
FIVE GROWTH PRIORITIES: EMERGING COUNTRIES TAILOR PRODUCTS, SERVICES, MANUFACTURING AND CHANNELS Dell BRIC* Y/Y growth is accelerating and becoming a bigger portion of Dell Y/Y Revenue % Dell • Emerging E i Countries C t i – BRIC* Growth Revenue country revenues grew a strong 40% Y/Y Rev Growth 9% +
Slide 19: Cost and Productivity Initiatives
COST AND PRODUCTIVITY INITIATIVES MULTI-BILLION DOLLAR OPPORTUNITIES • Cost of Goods Sold: Design lower cost products with faster development cycles and competitive features. Reduced consumer development cycle time by half. • Headcount: Targeted a 10% reduction in headcount headcount, or 8 8,800 800
Slide 20: Dell Outlook
DELL OUTLOOK • Results could be impacted by investments to improve productivity and execution, reduce headcount and invest in infrastructure and acquisitions • Seeing conservatism in some IT spending in U.S. - especially financial services. Dell well positioned regardless of economic cycle as custom
Slide 21: Q4 Strategy Update Key Takeaways
Q4 STRATEGY UPDATE KEY TAKEAWAYS • Acceleration in our growth is just a first step as we execute g against the five p priorities • We have a lot more to do to restore our competitiveness so that we can deliver long-term profitable growth • Significant opportunity to reduce costs while improving prod