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Wednesday February 18, 4:19 pm Eastern Time
Company Press Release
DELL TOPS $12 BILLION IN ANNUAL REVENUES
Company Grows Four Times Market Rate
Announces 2-for-1 Stock Split
ROUND ROCK, Texas--(BUSINESS WIRE)--Feb. 18, 1998--Dell Computer Corporation (Nasdaq:DELL - news), the world's leading direct computer systems company, today reported record revenues for the 16th consecutive quarter. Revenues increased 55 percent to more than $3.7 billion in the fourth quarter ended Feb. 1, 1998. This marked the 12th consecutive quarter in which the company's year-over-year revenues grew more than 40 percent. Earnings per share rose 62 percent to $0.81, compared with $0.50 a year ago.
Revenues for fiscal 1998 increased 59 percent to $12.3 billion, while earnings per share for the year were $2.56, compared with $1.32 last year, a 94-percent increase. As a result of its strong performance, Dell advanced from the fifth position in the PC industry worldwide in calendar 1996 to No. 3 in 1997, based on unit shipments.
Dell also announced today that its Board of Directors has declared a 2-for-1 stock split. This split, the company's fifth in the last six years, will be paid in the form of a 100-percent stock dividend to be issued on March 6, 1998, to shareholders of record as of Feb. 27, 1998. All share and per-share data are presented prior to this split.
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(in millions, except per-share data)
Q4 FY'98 Q4 FY'97 FY'98 FY'97
Net Revenues $ 3,737 $ 2,412 $12,327 $ 7,759
Operating Income $ 397 $ 250 $ 1,316 $ 714
Net Income $ 285 $ 188 $ 944 $ 518
Diluted Earnings Per Share $ 0.81 $ 0.50 $ 2.56 $ 1.32
Diluted Weighted Avg. Shares 353 372 369 391
''The key to our performance in the fourth quarter was focus,'' said Michael Dell, chairman and chief executive officer. ''By remaining focused, we have helped our customers benefit from the superior performance, service and value that our unique direct model delivers.
''We are proud to have delivered superior value to our shareholders, while growing our business at four times the industry rate. We are equally pleased to report that Dell stock appreciated more than 200 percent for the second consecutive year and that we again led the computer industry in return on invested capital with a record 217 percent for the quarter and 186 percent for the year.''
Asset Management Again Leads Industry; Inventory Turns Once a Week
Dell continued to set the pace for the industry in managing its assets. The company generated $590 million in cash from operations during the fourth quarter, ending the year with $1.8 billion in cash and marketable securities.
During the quarter, the company achieved a record seven days of inventory. That is equivalent to one inventory turn each week for the full fiscal year.
Operating margin was 10.6 percent in the fourth quarter, compared with 10.4 percent in the year-ago quarter. For the year, the company continued to prudently manage margins and operating expenses together, reporting an annual gross margin of 22.1 percent and operating expenses of 11.4 percent.
European Revenues Approach $1 Billion; Asia Fastest-Growing Region
Driven by its efficient direct business model, the company continued to achieve strong results in all customer and product segments around the world. In the Americas region, revenues were $2.5 billion in the fourth quarter, a 51-percent increase over the year-ago quarter. Growth was strongest among corporate customers and consumers.
Major gains in Dell's consumer business were noteworthy. Year-over-year revenue growth in Dell's Americas consumer business nearly doubled, advancing faster than total company revenue growth. The company recently has expanded its focus on this market, pursuing a strategy to gain share among experienced buyers who purchase more fully featured systems, many of them online at www.dell.com.
Dell revenues in Europe were nearly $1 billion in the fourth quarter, increasing 61 percent year-over-year. Substantial gains were achieved in the U.K., Dell's largest market in Europe, where revenues increased 56 percent over the fourth quarter. Revenues also advanced sharply in Germany, with 64-percent year-over-year growth, and France, with a 70-percent increase.
Despite the recent economic crisis in Asia, Dell achieved profitable fourth-quarter results in Asia-Pacific, including Japan. Revenues exceeded $240 million, a 79-percent increase over the year-ago quarter, making Dell's business in Asia-Pacific the company's fastest-growing region in the world.
Fourth Quarter Results Push Enterprise Systems Revenues over $1 Billion
Dell's enterprise systems business, comprising sales of server and workstation products, continued to grow rapidly. Revenues from enterprise systems in fiscal 1998 increased more than 250 percent on a year-over-year basis and exceeded $1 billion for the year.
Since entering the market in the second quarter of fiscal 1998, Dell has gained strong momentum in its high-performance workstation business. The company already has become the No. 3 supplier worldwide of workstations based on the Microsoft NT operating system, according to International Data Corp.
Focus on Direct Model Underscores Fiscal 1998 Success
Sustained focus on its direct model and consistency of execution underscored Dell's growth beyond the $12 billion level in fiscal 1998. Key achievements in fiscal 1998 included the following:
Dell made significant progress enhancing its direct model by dramatically expanding its Internet capabilities. By year end, www.dell.com was generating sales of more than $4 million per day. In the fourth quarter alone, www.dell.com received approximately 10 million visits.
The company continued to broaden its array of services in fiscal 1998. Demand for DellPlus factory-integrated customer hardware and software solutions increased 80 percent during the year. Also, Dell continued to expand its online customer services, offering more than 800 ''premier'' pages for major customers and 45,000 pages of technical support data at year end.
Already the No. 4 server supplier in the world, the company strengthened its rapidly growing enterprise systems business with the successful launch of a dedicated workstation business unit.
The segmentation strategy used in the past for Dell's desktop business was successfully applied to notebooks with the creation of two separate lines. The Inspiron notebook line is designed for individuals and small- to medium-sized businesses, and the Latitude notebook line is well-suited for corporate and institutional customers. For the year, Dell's notebook revenues grew to $2.2 billion, or by nearly 74 percent on a year-over-year basis.
Dell enhanced its reputation for product leadership by garnering more than 325 product and service awards in key technology publications around the world.
To support its world-class product lines, Dell continued to expand its global infrastructure with the construction and announcement of new manufacturing, sales and service facilities in the U.S. and Europe.
''By all measures we had an extraordinary year,'' stated Mr. Dell. ''Staying focused -- on what our customers want, on consistently executing over time, and on building upon the strengths of our unique direct business model -- was fundamental to our success in fiscal 1998.''
Growth Opportunities Continue in Fiscal 1999
''We see a healthy industry in the year ahead,'' said Mr. Dell. ''Major demand drivers, including processor transitions and component cost reductions, remain solid, and consolidation is separating top companies such as Dell from the rest of the field.
''The move to the Intel Pentium II processor to run modern business and consumer applications and the latest Microsoft operating systems, including Windows NT and Windows 98, is already well underway. Dell is well positioned for this transition. As we exited fiscal 1998, Pentium II represented nearly 90 percent of Dell Dimension desktop revenues and 70 percent of OptiPlex desktop revenues.
''Last year we said that we intended to extend the capabilities of the Dell direct model through opportunities with the Internet and value-added services. We have made great progress, and we intend to stay focused on further extending these efforts in fiscal 1999.
''We see additional opportunities in the year ahead. Expansion of our direct model in Asia-Pacific and Latin America, with further penetration in Europe, holds great potential for us. We also see significant potential to expand our enterprise and consumer businesses and our shares of the server, workstation and notebook markets. Finally, the Internet holds great promise for us to enhance efficiencies, as we ultimately move toward a goal of virtual integration with our customers and suppliers.
''As competition in our industry intensifies, the ability to remain focused will be even more critical to our long-term success. We are committed to a clear focus on delivering value to our customers and shareholders by enhancing our direct advantage. ''
Consolidated statements of income and financial position follow.
Ranked in the top 200 of Fortune 500(R) companies, Dell Computer Corporation is the world's leading direct computer systems company, based on revenues of $12.3 billion for the past four quarters. Dell designs and customizes products and services to end-user requirements, and offers an extensive selection of peripherals and software through the DellWare(R) program. Information on Dell and its products can be obtained through its toll-free number 1-800-388-8542 or by accessing the Dell World Wide Web server at www.dell.com. |
