Find your $100k business idea in 10 days and get the first clients fast

Dell’s International And Enterprise Business

Drives First Quarter Revenue Growth

Dell’s expansion of business outside the United States and its sales of servers, storage and enhanced services drove revenue of $14.2 billion and earnings of 33 cents per share in the fiscal first-quarter 2007.

Enhanced services revenue grew 28 percent year-over-year in the first quarter. Storage revenues increased 12 percent year-over-year. Shipments of Dell products were led by a 36 percent year-over-year increase in mobility units. Revenue outside the United States grew 12 percent and was 44 percent of Dell’s overall revenue.

Dell had operating income of $949 million, or 6.7 percent of revenue, in the quarter, which reflected investments in customer experience as well as pricing decisions the company believes will drive future growth. Cash flow from operations was $1.0 billion for the quarter and Dell ended the quarter with $11.1 billion in cash and investments. During the quarter, Dell spent $1.7 billion to repurchase 58 million shares of common stock.

"The competitive environment has been more intense than we had planned for or understood," said Kevin Rollins, Dell’s chief executive officer. "Over the last year, we tried to achieve both growth and increased levels of profitability, which allowed our competitors to improve their relatively low levels of profitability and accelerate their growth. We have now taken action to reignite our growth and reassert the unique value of our Direct Model. We are re-establishing our price position, investing in customer sales, service and support, building our product and technology leadership and improving our cost structure and productivity. All of these actions will enable Dell to optimize the significant potential we have for global growth at a time when we expect our industry to undergo significant change and consolidation."

Mr. Rollins said Dell is addressing the changes by reinvigorating its direct business model to provide greater value and service for customers. Specifically, Dell is focusing on three areas:

Customer Service
·    The company is investing more than $100 million to regain its leadership position in customer experience.
·    More than 2,000 new sales and support personnel have been hired in the U.S.; call centers have been added or expanded in Ottawa, Oklahoma City, Manila and Nashville.
·    By the end of the fiscal year, Dell will have opened 14 new manufacturing, call center and design and development facilities over a two-year period.

Product Leadership
·    Dell will end the year with the broadest and highest quality product line in its history, including a new generation of servers, and new storage products, desktop and notebook computers, and printers.
·    In the enterprise, we will launch new ninth generation servers featuring Intel’s Woodcrest microprocessors. Dell will also introduce new AMD Opteron processors in our multi-processor servers by the end of the year offering a great new technology to our customers at the high-end of our server line.
·    On the client side, our focus on the XPS brand and acquisition of Alienware signals a renewed vigor around product design and quality for desktops and notebooks. In mobility, we will enhance our line this fall with Intel’s new energy-efficient Merom processor. And, we will have Intel’s Conroe in our desktops and workstations later this year.
Productivity and Cost Improvements
·    Dell is accelerating plans to drive $3 billion of cost improvement in the year including structural material, component and transformational costs as well as improved warranty costs.

We are confident in our ability to continue growing globally, particularly when we remember that 95 percent of the world’s population lives outside the U.S. and we have less share of market outside the U.S. than some of our competitors," Mr. Rollins said. "The growth associated with these initiatives will not be accomplished in just one or two quarters. We are positioning the company for the next three to five years and beyond."
Dell is making key investments in its top countries, including China, India, Germany, Brazil and the U.S., to ensure that it can design, manufacture and provide service close to its customers for the long-term.

Dell ended its practice of providing specific quarterly guidance for revenue and earnings per share and said it would focus forward-looking statements on long-term specific company and industry factors influencing performance. Dell does expect financial results for the second fiscal quarter of fiscal 2007 to be similar to its first quarter results.

Product Highlights
Mobility revenue was up 12 percent on 36 percent unit growth year-over-year. Enhanced services revenue grew 28 percent year-over-year to $1.4 billion. Revenues for storage increased 12 percent year-over-year, while server shipments increased 8 percent. Revenue for imaging products increased 10 percent year-over-year on 54 percent growth of consumables, such as ink and toner cartridges and paper. More than half of Dell’s imaging revenue now comes from purchases of consumables. During the second quarter, Dell will introduce a new generation of business color, mono and multi-function laser printers.

Regional Highlights
Sales outside the U.S. were 44 percent of the company’s overall revenue for the first quarter, up 12 percent year-over-year.
Asia Pacific and Japan (APJ) increased revenue in the quarter by 17 percent and units by 30 percent year-over-year or roughly twice the growth of the industry. In China, revenue grew 29 percent year-on-year with continued strong profitability. In other emerging businesses, revenue increased by 54 percent year-over-year in Korea and 40 percent in India.
Shipments increased 18 percent year-over-year in Europe, Middle East and Africa (EMEA). Revenue for enterprise products – which includes servers, storage, services and associated software and peripherals – increased 9 percent in the quarter year-over-year.
Americas International – all of the Americas excluding the U.S. – had revenue growth of 26 percent year-over-year with 74 percent growth in Brazil. The U.S. maintained its number one position with 32 percent market share. Dell was recently selected the top equipment brand in a survey of information technology executives in the United States by ACNielsen who cited Dell’s value and outstanding customer service.

Round Rock, Texas, 19.05.2006

{mosloadposition user10}

Leave a Reply

Your email address will not be published. Required fields are marked *