(BSNS WIRE) Dell Earnings Rise 65 Percent On 51-Percent Revenue Growth;
Dell Earnings Rise 65 Percent On 51-Percent Revenue Growth; Customer Sales on
www.dell.com Top $10 Million a Day as Business Commerce Soars
Business Editors & High-Tech Writers
ROUND ROCK, Texas--(BUSINESS WIRE)--Nov. 12, 1998--
Internet Now Represents 20 Percent of Company Revenue
Dell Computer Corporation (Nasdaq:DELL) today reported earnings
per share increased 65 percent to $0.28 for the quarter ended Nov. 1,
1998. Revenue grew 51 percent to $4.8 billion, as the company for the
first time surpassed $10 million a day in customer sales via
www.dell.com.
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(in millions, except per-share data)
Q3 FY'99 Q3 FY'98 Yr. to Yr. Growth
Net Revenue $4,818 $3,188 51%
Operating Income $539 $346 56%
Net Income $384 $248 55%
Earnings Per Share $0.28 $0.17 65%
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"Our business continued to grow profitably in all customer
segments and regions around the world, demonstrating the strength and
consistency of the Dell direct model," said Michael Dell, chairman and
chief executive officer. "Our focused execution has enabled us to
achieve the No. 1 position in profitability in the computer systems
industry. We also were No. 1 in revenue and unit shipment growth among
the top 10 computer systems companies, growing at more than five times
the industry rate worldwide."
Company Again Leads Industry in Asset Management
Dell generated $586 million in cash from operations. The company
increased its cash and marketable securities to $2.8 billion, while
repurchasing 18 million shares during the quarter. Dell has
repurchased 360 million shares since its share repurchase program
began in February 1996.
With a return on invested capital of 190 percent, Dell continued
to lead the industry in this key area of asset management efficiency.
Inventory improved to seven days, equivalent to 52 inventory turns per
year.
Gross margin remained level at 22.5 percent compared to the
year-ago quarter, while operating expenses declined to 11.4 percent
from 11.6 percent a year ago. As a result, operating margin rose to a
record 11.2 percent compared to 10.9 percent last year.
Asia-Pacific/Japan Region Grows 49 Percent; Global Momentum Continues
In contrast to overall industry growth of only two percent in the
region, Dell again grew profitably in Asia-Pacific including Japan,
achieving revenue growth of 49 percent. This exceeded the company's
growth rate of 35 percent in the first half of the year, further
highlighting the power of Dell's direct model even under difficult
economic conditions. During the quarter, Dell launched its direct
model in the world's most populous market, China, and began shipping
from its new manufacturing and customer support center in Xiamen in
southern China.
In Europe, Dell achieved revenue growth of 68 percent,
maintaining its No. 2 market position. In seven countries in the
region the company's growth exceeded 85 percent. During the quarter,
Dell increased its market share by more than 50 percent and again
achieved the highest growth rate among leading computer systems
companies in the region.
Buoyed by gains in the government sector, revenue in the
company's Americas region grew 46 percent. While its federal
government business typically is robust in the third quarter, Dell
also had strong sales gains among corporate customers and in its
consumer and small business segment.
Demand for Enterprise and Notebook Products Continues
Spurred by strong demand among corporate customers, Dell
continued its momentum in enterprise systems, which include servers
and workstations, achieving year-over-year revenue growth of 104
percent. This was the company's eighth consecutive quarter of
triple-digit growth in enterprise systems.
During the quarter, the company furthered its strategy to provide
corporate customers greater ease in managing their data centers. Dell
began shipping PowerVault fibre channel storage products and launched
its new high-end PowerEdge 6350 server.
Workstations continued to make exceptional gains. With the launch
of the Precision 210, Dell further enhanced its family of workstations
based on the Microsoft NT operating system. The company continues to
hold the No. 2 position worldwide in NT-based workstations.
Revenue from Dell's Latitude and Inspiron lines of notebook
products increased 93 percent over the year-ago quarter. During the
quarter, the company more than doubled its market share, capturing
nine percent of the global notebook market. Dell notebooks continue to
receive critical acclaim, as the wide-screen, high-powered Inspiron
7000 achieved the highest distinction as "best portable PC ever" in
the current edition of "PC Magazine." In addition, the company has
just launched its sleek, lightweight Inspiron 3500, further expanding
its technology leadership in this important market.
Sales of Dimension and OptiPlex desktop computers remained
strong, as Dell maintained its No. 2 position in the worldwide desktop
PC market. The company again was rated first among desktop vendors for
corporate customer satisfaction by Technology Business Research in its
annual Corporate IT Buying Behavior & Customer Satisfaction Study.
Dell's focus on delivering the best customer experience continued
to achieve positive results in major customer satisfaction product and
service surveys during the quarter. Key achievements included
capturing "Fortune's" first annual Reader's Choice Award for Personal
Service and Reliability, as Dell was chosen overwhelmingly as "best of
breed" in PCs. The company also won top ratings for the third
consecutive year in "PC Magazine's" annual Service and Reliability
Survey.
Dell's Internet Sales and Service Excel
For the first time, Dell surpassed $10 million a day in worldwide
sales to customers via www.dell.com, achieving a dramatic sales surge
in corporate relationship accounts. Equivalent to an annual run rate
of more than $3.7 billion, this is more than triple the on-line sales
level achieved by Dell a year ago.
When Dell first launched direct Internet capabilities more than
two years ago, customer sales through www.dell.com primarily were to
consumers. Today, Dell's on-line business has expanded dramatically
through sales and service to business and government customers.
The site has significantly enhanced e-service and technical
support capabilities, with more than 8,500 customized web pages
(Premier Pages) for larger customers. Among other features, customers
can access more than 50,000 pages of technical data, participate in a
public discussion forum (Dell Talk), register online for hardware and
software updates and use a variety of advanced diagnostic tools.
Healthy Market Outlook Prevails
"As we come to the end of the calendar year, industry conditions
remain healthy," said Mr. Dell. "Processor and operating system
transitions and component cost declines continue to position our
industry for strong customer demand.
"With this solid industry backdrop, we are focused on investing
in the core strengths of our direct business model, providing the best
customer experience in the industry. We believe that is a key reason
why we achieve highest marks for performance, reliability and service
in customer satisfaction surveys. As long as we maintain our focus and
execution, we believe we have the competitive advantage to sustain our
growth and extend our industry leadership."
Ranked No. 125 among the Fortune 500 companies and No. 363 in the
Fortune Global 500, Dell Computer Corporation is the world's leading
direct computer systems company, based on revenue of $16.8 billion for
the past four quarters. Dell designs, manufactures and customizes
products and services to customer requirements and offers an extensive
selection of software and peripherals. Information on Dell and its
products can be obtained through its toll-free number 800/388-8542
or by accessing the Dell World Wide Web site at www.dell.com.
Dell, Dimension, OptiPlex, Latitude and PowerEdge are registered
trademarks; and Dell Precision, Inspiron and PowerVault are trademarks
of Dell Computer Corporation.
Fortune 500 is a registered trademark of Time Inc.
Dell disclaims any proprietary interest in the marks and names of
others.
Special note: Statements in this press release that relate to
future results and events are based on the company's current
expectations. Actual results in future periods may differ materially
from those currently expected or desired because of a number of risks
and uncertainties, including the level of demand for personal
computers; the intensity of competition; currency fluctuations; the
cost of certain key components; and the company's ability to
effectively manage product transitions and component availability, to
minimize excess and obsolete inventory and to continue to expand and
improve its infrastructure (including personnel and systems).
Additional discussion of these and other factors affecting the
company's business and prospects is contained in the company's
periodic filings with the Securities and Exchange Commission.
Consolidated statements of income and financial position follow.
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DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended
----------------------------
Nov. 1, Aug. 2, Nov. 2,
1998 1998 1997
-------- -------- --------
Net revenue $ 4,818 $ 4,331 $ 3,188
Cost of revenue 3,732 3,346 2,471
-------- -------- --------
Gross margin 1,086 985 717
Selling, general and
administrative 471 436 312
Research, development and
engineering 76 66 59
-------- -------- --------
Total operating expenses 547 502 371
-------- -------- --------
Operating income 539 483 346
Financing and other 9 11 13
-------- -------- --------
Income before income taxes 548 494 359
Provision for income taxes 164 148 111
-------- -------- --------
Net income $ 384 $ 346 $ 248
======== ======== ========
Basic earnings per common
share(a) $ 0.30 $ 0.27 $ 0.19
======== ======== ========
Diluted earnings per
common share(a) $ 0.28 $ 0.25 $ 0.17
======== ======== ========
Weighted average shares
outstanding(a):
Basic 1,264 1,264 1,307
Diluted 1,381 1,392 1,442
Percentage of Net Revenue:
Gross margin 22.5% 22.7% 22.5%
Selling, general and
administrative 9.8% 10.1% 9.8%
Research, development and
engineering 1.6% 1.5% 1.8%
Total operating expenses 11.4% 11.6% 11.6%
Operating income 11.2% 11.1% 10.9%
Income before income taxes 11.4% 11.3% 11.3%
Net income 8.0% 8.0% 7.8%
Income tax rate 30.0% 30.0% 31.0%
Net revenue by geographic region:
% of total net revenue
Americas 70% 69% 72%
Europe 24% 25% 22%
Asia-Pacific and Japan 6% 6% 6%
Net revenue by product line:
% of system net revenues
Desktops 64% 66% 72%
Enterprise 14% 12% 11%
Portables 22% 22% 17%
-------- -------- --------
Total system net revenues 100% 100% 100%
======== ======== ========
Non-system net revenues 7% 6% 8%
(peripherals,other);
% of total system net revenues
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Restated to reflect the two-for-one common stock splits effected
on Sept. 4, 1998.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
% Growth Rates
----------------------------
Sequential Yr. to Yr.
----------------------------
Net revenue 11% 51%
Cost of revenue 12% 51%
Gross margin 10% 51%
Selling, general and
administrative 8% 51%
Research, development and
engineering 16% 29%
Total operating expenses 9% 47%
Operating income 12% 56%
Financing and other -- --
Income before income taxes 11% 53%
Provision for income taxes -- --
Net income 11% 55%
Basic earnings per common
share(a) 11% 58%
Diluted earnings per
common share(a) 12% 65%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Restated to reflect the two-for-one common stock splits effected
on Sept. 4, 1998.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Year To Date
--------------------
Nov. 1, Nov. 2, Yr. to Yr.
% Growth
1998 1997 Rates
--------- --------- ------------
Net revenue $ 13,070 $ 8,590 52%
Cost of revenue 10,125 6,691 51%
--------- ---------
Gross margin 2,945 1,899 55%
Selling, general and
administrative 1,296 832 56%
Research, development and
engineering 198 148 34%
--------- ---------
Total operating expenses 1,494 980 52%
--------- ---------
Operating income 1,451 919 58%
Financing and other 26 36 --
--------- ---------
Income before income taxes 1,477 955 55%
Provision for income taxes 442 296 --
--------- ---------
Net income $ 1,035 $ 659 57%
========= =========
Basic earnings per common
share(a) $ 0.82 $ 0.50 64%
========= =========
Diluted earnings per
common share(a) $ 0.74 $ 0.45 64%
========= =========
Weighted average shares
outstanding(a):
Basic 1,268 1,325
Diluted 1,396 1,474
Percentage of Net Revenue:
Gross margin 22.5% 22.1%
Selling, general and
administrative 9.9% 9.7%
Research, development and
engineering 1.5% 1.7%
Total operating expenses 11.4% 11.4%
Operating income 11.0% 10.7%
Income before income taxes 11.2% 11.1%
Net income 7.9% 7.7%
Income tax rate 30.0% 31.0%
Net revenue by geographic region:
% of total net revenue
Americas 69% 70%
Europe 25% 23%
Asia-Pacific and Japan 6% 7%
Net revenue by product line:
% of system net revenues
Desktops 65% 73%
Enterprise 13% 8%
Portables 22% 19%
--------- ---------
Total system net revenues 100% 100%
========= =========
Non-system net revenues 6% 9%
(peripherals,other);
% of total system net revenues
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Restated to reflect the two-for-one common stock splits effected
on Sept. 4, 1998.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Financial Position
and Related Financial Highlights
(in millions, except for "Ratios" and "Other information")
(unaudited)
Nov. 1, Aug. 2, Nov. 2,
1998 1998 1997
--------- --------- ---------
Assets:
Current assets:
Cash $ 519 $ 511 $ 222
Marketable securities 2,278 2,107 1,393
Accounts receivable, net 2,157 1,800 1,350
Inventories 281 288 301
Other 680 394 341
--------- --------- ---------
Total current assets 5,915 5,100 3,607
Property, plant and
equipment, net 511 446 301
Other 16 14 13
--------- --------- ---------
Total assets $ 6,442 $ 5,560 $ 3,921
========= ========= =========
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 2,313 $ 1,928 $ 1,488
Accrued and other 1,345 1,209 891
--------- --------- ---------
Total current liabilities 3,658 3,137 2,379
Long-term debt 512 512 --
Deferred revenue on warranty
contracts 247 244 235
Other 78 68 49
--------- --------- ---------
Total liabilities 4,495 3,961 2,663
Put options -- -- 51
Stockholders' equity 1,947 1,599 1,207
--------- --------- ---------
Total liabilities and
stockholders' equity $ 6,442 $ 5,560 $ 3,921
========= ========= =========
Ratios:
Current ratio 1.62 1.63 1.52
Quick ratio 1.35 1.41 1.25
Days supply in inventory 7 8 11
Days of sales in accounts
receivable 40 37 38
Days in accounts payable 56 52 54
Other Information:
Headcount (approximate) 23,300 20,800 14,900
Average total revenue/unit
(approximate) $ 2,400 $ 2,400 $ 2,600
Return on invested capital(a) 190% 217% 178%
Note: Ratios are calculated based on underlying data in thousands.
(a) Calculation excludes cash and marketable securities in excess of
5% of annualized revenue.
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--30--sw/sa* bd/sa
CONTACT: Dell Computer Corporation, Round Rock
Media Contacts:
Peter Scacco or T.R. Reid, 512/728-4100 (media only)
peter_scacco@dell.com or tr_reid@dell.com
or
Investor Contacts:
Don Collis, 512/728-8671
don_collis@dell.com
or
Robert Williams, 512/728-7570
robert_williams@dell.com
KEYWORD: TEXAS
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED RETAIL
INTERACTIVE/MULTIMEDIA/INTERNET EARNINGS
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