DELL EARNINGS RISE 72 PERCENT ON 54-PERCENT REVENUE GROWTH
Company Advances to No. 2 Position Worldwide,
Announces 2-for-1 Stock Split
ROUND ROCK, Texas, August 18, 1998 -- Dell Computer Corporation (Nasdaq:DELL)
today reported that earnings per share increased 72 percent to $.50 for the quarter
ended Aug. 2, 1998. Revenues increased 54 percent to more than $4.3 billion. On a
unit shipment basis, Dell advanced to the No. 2 position in the computer systems
industry, according to industry-analyst reports.
Dell also announced today that its Board of Directors has declared a 2-for-1 stock split.
This split, the sixth in the last six years, will be paid in the form of a 100-percent stock
dividend to be issued on Sept. 4, 1998, to shareholders of record as of Aug. 28, 1998.
All per-share data are presented prior to this split.
(in millions, except per-share data)
Q2 FY'99
Q2 FY'98
Yr. to Yr.
Growth
Net Revenues
$4,331
$2,814
54%
Operating Income
$483
$296
63%
Net Income
$346
$214
62%
Earnings Per Share
$0.50
$0.29
72%
"Our sustained growth and solid performance across all segments and regions
continue to underscore the strength and efficiencies of our direct business model," said
Michael Dell, chairman and chief executive officer. "We believe that our performance
positions us as No. 1 in profitability, revenue growth and unit growth among major
systems companies worldwide.
"We again provided superior value to our shareholders, growing at more than six times
the industry rate," said Mr. Dell. "Our unique direct business model has allowed us to
take advantage of rapidly declining component costs and pass along savings to our
customers while delivering industry-leading profitability."
Company Maintains Consistent Focus on Asset Management
Dell again achieved one of the most liquid balance sheets in the industry, generating
$641 million in cash from operations. The company closed the quarter with cash and
marketable securities of more than $2.6 billion, despite having repurchased 11 million
additional shares during the quarter. Dell has repurchased 171 million shares since it
initiated its share repurchase program two and one-half years ago.
Dell continued to lead the computer systems industry with a return on invested capital
of 217 percent and eight days of inventory, the equivalent of 46 inventory turns per
year.
Gross margin increased to 22.7 percent from 22.2 percent in the year-ago quarter.
Operating expenses were 11.6 percent, the same level as in the year-ago quarter, as
the company continued to invest in infrastructure to support growth. As a result,
operating income was a record 11.1 percent.
Dell Ranked No. 1 in U.S. Desktop Market, No. 2 Overall in Europe
Asia-Pacific/Japan Continues Profitable Growth
Dell accounted for more than half of all unit-shipment growth in the computer systems
industry worldwide in the quarter, according to analysts, as the company continued its
momentum in all geographic regions and customer segments.
With revenues of nearly $3 billion, Dell's business in the Americas region grew 50
percent, more than five times the growth rate in the computer systems industry in the
region. Gains in the Americas reflected strong demand from enterprise customers and
individual consumers.
In the U.S. desktop systems market, Dell achieved the No. 1 position in unit shipments,
according to industry analyst reports.
The company advanced to the No. 2 position in Europe in overall unit shipments,
according to analysts. Revenues grew at a rate of 73 percent, which was more than
three times that of the industry in the region. In five European countries Dell grew more
than 100 percent.
Dell continued its profitable growth in the Asia-Pacific region including Japan, despite
the fact that the computer systems industry declined 9 percent in unit shipments.
Revenues increased 34 percent to $280 million. Also, the company has begun shipping
products from its new customer center based in Xiamen, China.
Growth in Enterprise Systems Continues
Dell continued to set the pace for the industry in enterprise systems. It was the seventh
consecutive quarter of revenue growth of more than 100 percent in enterprise systems.
At the end of its first year in the high- performance workstation market, the Dell
Precision workstation line had gained the No. 2 position worldwide in Windows NT
workstations, according to industry analysts.
Supported by revenue growth of 84 percent, Dell's Latititude and Inspiron lines of
notebook products allowed Dell to advance to the No. 4 position in notebooks
worldwide, while controlling the No. 3 position in the U.S., according to analysts.
During the quarter, Dell continued its overall product leadership, capturing
approximately 100 awards for performance and value. Dell was the only company to win
PC Magazine's "Readers Choice Award" for service and reliability in both desktops and
notebooks, marking the third consecutive year that Dell achieved the top spot. The
company also achieved enterprise-tier leadership in desktops and notebooks,
according to Gartner Group.
Strong First-Half Momentum Highlights Continued Focus on Direct Model
"Our performance in the first half of the year illustrates how we have executed our
direct model to provide our customers with superior value, service and accountability,"
said Mr. Dell.
"We have continued to invest in the model, addressing areas that give us competitive
advantages in technology, velocity and proximity to our customers. These include our
growing Internet business at www.dell.com, which now is generating worldwide sales of
approximately $6 million per day; enhanced value-added products and services aimed
at the enterprise market; and expansion of our global resources and manufacturing
capabilities in China, Europe and the Americas.
"Moving into the second half of the year, key industry conditions including demand,
component cost declines and pricing remain healthy, and consolidation continues to
occur around the leading systems companies. We believe we are well-positioned to
capitalize on these conditions to further our growing market leadership position."
|
