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Fez
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DELL EARNINGS RISE 45 PERCENT ON 41-PERCENT REVENUE GROWTH
Internet Increasing Company's Competitive Advantage
ROUND ROCK, Texas, May 18, 1999 -- Dell Computer Corporation (Nasdaq: DELL) today reported record operating results in its first quarter, led by strong sales of servers and of personal computers to consumers. Per-share earnings rose 45 percent, to 16 cents, during the quarter ended April 30. Revenue exceeded $5.5 billion, up 41 percent from the year-ago quarter.
(in millions, except per-share data) Q1 FY'00 Q1 FY'99 Change
Revenue $5,537 $3,920 41%
Operating Income $600 $429 40%
Net Income $434 $305 42%
Earnings Per Share $0.16 $0.11 45%
"Industry demand was solid during the first quarter, and we once again achieved industry-leading results," said Michael Dell, chairman and chief executive officer. "At the same time, we continued to enhance and broaden the fundamental competitive advantages of our customer-focused direct business model.
"We're increasingly applying the Internet to our entire business, from component design to end-user support, in the process making it easier to do business with Dell, enhancing relationships with customers and suppliers and reducing costs for all of us. We believe we're doing so to a much greater degree than anyone else in our industry, and it is already a compelling difference in winning and retaining customers of all types."
Sales via www.dell.com surpassed $18 million per day during the quarter, accounting for 30 percent of overall revenue. The company's application of the Internet to other parts of the business-including procurement, customer support and relationship management-is approaching the same 30-percent rate.
Dell led all major competitors in unit, revenue and profit growth during the quarter. Analysts reported that Dell advanced to the No. 2 position in worldwide market share, as the company's business grew at about two and one-half times the estimated industry rate. Operating income as a percent of revenue was 10.8, compared to 10.9 percent a year ago, while net income was 7.8 percent, equal to the prior year's quarter.
Dell generated more than $1 billion in cash from operations during the quarter, which was used, in part, to repurchase 18 million shares of the company's common stock. At quarter-end, cash and marketable securities totaled a record $4.0 billion, up from $2.4 billion one year ago.
The company again led the computer systems industry in overall asset management, operating on six days of inventory for the second consecutive quarter and recording a return on invested capital of 189 percent.
Regions Grow at Multiples of Industry Rates
Revenue from Dell's Americas region rose 45 percent year-over-year, propelled by a 54-percent increase in sales to consumers and small-business customers. The company's Americas growth was more than double the industry average. Additionally, ZD Market Intelligence reported that Dell was the market-share leader in total PC shipments to U.S. businesses.
European revenue increased 29 percent, as company shipments rose at more than twice the regional industry rate. Dell Europe moved into the No. 2 share position in the region even as it continued to invest in development of its organizational, manufacturing, information-technology and call-center structures.
Dell accelerated its consistently strong growth in Asia-Pacific, including Japan, led by exceptional results in China, a relatively new and strategically important market for the company. Revenue in the total region rose 48 percent, as Dell shipments expanded at more than double industry rates.
Enterprise Sales, Internet Tools Push Growth
Dell's revenue from enterprise systems-comprising network servers, workstations and storage products-surged 97 percent from last year, growing to 16 percent of total company sales, a new high. Shipments of Dell PowerEdge servers were up more than three times the industry average, translating into a year-over-year gain of three full points of market share. The company ranked No. 3 in worldwide server share in the period, and No. 2 in the United States.
Among a number of key enterprise-systems awards won by Dell during the quarter, Computerworld magazine named the PowerEdge line its "IT Leaders' Choice" for corporate servers. The Dell Precision 610 workstation, which runs on Intel Corp.'s Pentium III Xeon processor, earned an "Editor's Choice" award from PC Magazine in its annual comparison of such products.
Dell also added two full points to its worldwide market share for notebook computers, and nearly four points in the United States, raising its share rankings to Nos. 4 and 2, respectively.
The company further developed its pacesetting Internet capabilities during the quarter, in the process driving significantly higher customer use of www.dell.com for commerce and support. Last week, the company announced new features within the 19,000-plus customized "Premier Page" Web sites created, to date, for corporate, government and education customers. Enhancements include dynamic price upgrades, easier navigability and a greater range of available upgrades and options.
Dell's Internet revenue during the first quarter was more than triple that recorded in the year-ago period, and translated to a $6.5 billion forward annual run rate. The company's www.dell.com site-which runs entirely on Dell PowerEdge servers-received 25 million visits last quarter.
Direct-Model Momentum Expected to Persist
According to Mr. Dell, prospects for computer system demand remain strong through the balance of the current fiscal year and beyond.
"For companies with effective, efficient business models, this industry remains healthy," said Mr. Dell. "We continue to see significant opportunity for expanding our business profitably.
"The competitive advantages of Dell's direct model have never been as distinct and extensive as they are today, and we expect to continue to grow at a multiple of the industry rate."
Ranked No. 78 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 revenues of $19.9 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 1-800-388-8542 or by accessing the Dell World Wide Web site at www.dell.com.
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