Slide 1: Schedule 14A Proxy Statement - Dell Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: Dell Supplemental Investor Materials
Dell Supplemental Investor Materials July 2013
Slide 3: Agenda
Agenda Business perspectives 2 Valuation perspectives 7 Appendix 13 1
Slide 4: Trends in Dell's PC business put the transformation at risk
Trends in Dell’s PC business put the transformation at risk Dell remains largely a PC business 1 Two thirds of Dell’s revenue is driven by PCs Support and Deployment services, which are largely PC-driven, represent a majority of consolidated operating income Cash flow that has fueled Enterprise acqu
Slide 5: Recent industry research forecasts continued PC deterioration
Recent industry research forecasts continued PC deterioration PC market outlook continues to show a secular decline On June 28, 2013, Morgan Stanley lowered its 2013 PC unit forecast from -5% to -10% “…the lack of catalyst until C4Q will likely drive disappointing near-term results” “Our tablet unit
Slide 6: PC exposure will likely continue to weigh on Dell's share price
PC exposure will likely continue to weigh on Dell’s share price, regardless of the Enterprise trajectory $40 Dell’s NTM P/E 20.0x multiple peaked at Dell NTM P/E multiple $37 15.4x in June ‘08 15.0x $30 $28 10.0x $20 5.0x $10 0.0x FY08 FY13 Source: Company filings; FactSet Note: Market data from 1/1
Slide 7: Returns for Dell's acquisition program remain uncertain
Returns for Dell’s acquisition program remain uncertain Significant future integration and investment still required Over $13bn spent on acquisitions since FY08 to transform Dell into a solutions-oriented business Sales force integration benefits and cross-selling synergies taking longer to achieve
Slide 8: Agenda
Agenda Business perspectives 2 Valuation perspectives 7 Appendix 13 6
Slide 9: Icahn / Southeastern's sum-of-the-parts valuation implies unrealistic multiples
Icahn / Southeastern’s sum-of-the-parts valuation implies unrealistic multiples Icahn / Southeastern Implied value per share FV / EBITDA Commentary n Dell's consolidated unaffected multiplewas 3.3x, which includes higher $2.00 growth ESG businesses EUC 3.0x n PC-centric peers' median EBITDA multiple
Slide 10: BCG "75% Case" is based on an aspirational cost savings target
BCG “75% Case” is based on an aspirational cost savings target, not concrete initiatives Forecasted operating income ($ in billions) Commentary BCG evaluated the impact if $6.0 management achieved 75% of the $5.7 aspirational cost savings of $3.3bn $5.5 Many of the categories of cost Implies an unre
Slide 11: Modest potential sponsor returns depending on the case
Modest potential sponsor returns depending on the case 1 IRRs using BCG 75% Case are unrealistic 2 Sub-20% IRR using Wall Street consensus Highlights why Michael Dell had to subsidize Silver Lake’s returns by rolling his shares at a lower price ($13.36 vs. $13.65) 3 other sponsors passed on the tran
Slide 12: Substantial downside risk to Dell shareholders if transaction rejected
Substantial downside risk to Dell shareholders if transaction rejected $13.65 represents substantial premium to implied Dell share prices using current HP P/E multiples 1 Assuming HP’s CY13E P/E $13.65 57% premium 97% premium 133% premium $8.67 $6.92 $5.85 Silver Lake / Final FY14 Wall Street LQA Mi
Slide 13: Absent transaction, where would the analyst price targets be?
Absent transaction, where would the analyst price targets be? 1 Current earnings Pre-LBO leak Wall Street estimates with price targets estimates Broker Price target FY14E EPS Implied P/E ratio FY14E EPS (May 2013) Argus Research $14.00 $1.90 7.4x $1.13 Baird 11.00 1.76 6.3x 0.91 BMO 11.00 1.57 7.0x
Slide 14: Agenda
Agenda Business perspectives 2 Valuation perspectives 7 Appendix 13 12
Slide 15: HP's recent performance has been superior to Dell's
HP’s recent performance has been superior to Dell’s Q1 FY14 (May) QoQ results Q2 FY13 (April) QoQ results Q1 FY14 Q4 FY13 QoQ var. Q2 FY13 Q1 FY13 QoQ var. Revenue $14,074 $14,314 (2%) Revenue $27,582 $28,359 (3%) Memo: PC revenue $6,891 $6,870 0% Memo: PC revenue $7,584 $8,204 (8%) 1 Operating inco
Slide 16: Forward-looking statements
Forward-looking statements Any statements in these materials about prospective performance and plans for the Company, the expected timing of the completion of the proposed merger and the ability to complete the proposed merger, and other statements containing the words “estimates,” “believes,” “anti
Slide 17: Additional information and where to find it
Additional information and where to find It In connection with the proposed merger transaction, the Company filed with the SEC a definitive proxy statement and other relevant documents, including a form of proxy card, on May 31, 2013. The definitive proxy statement and a form of proxy have been mail