Q1 FY'10 Financial Statements in .pdf Format

  • Operating Expenses Down More Than $300 Million
  • On Track to $4 Billion in Annualized Cost Reductions
  • Cash Flow of $761 Million

Dell drove solid cash flow in a challenging demand environment during its fiscal first-quarter 2010, as the company continued to emphasize operating efficiency, balancing growth and profitability, and development of capabilities even more deeply into data-center computing, services and software.

Earnings for the quarter ended May 1 were 15 cents per share on revenue of $12.3 billion. Earnings included expenses of $185 million, or nine cents per share, for organizational effectiveness actions.

Operating expenses were down $101 million from the previous quarter and $312 million from last year’s first quarter. Operating income was $414 million. Cash flow from operations was $761 million, as Dell ended the quarter with $10.7 billion in cash and investments.

     First Quarter
(in millions, except share data)

FY10

FY09

Change

Revenue

$12,342

$16,077

(23%)

Operating Income

$414

$899

(54%)

Net Income

$290

$784

(63%)

EPS

$0.15

$0.38

(61%)

“We’re continuing to transform the company on the cost side and delivering strong cash flow,” said Michael Dell, chairman and chief executive officer. “Re-establishing cost leadership and having flexibility to invest in our business will position us well as IT spending improves.

“Signals about the demand environment are mixed, but we’re preparing for what we believe will be a powerful replacement cycle, with virtualization and managed services playing larger roles in what customers want and Dell provides.”

Mr. Dell said the company further broadened its enterprise computing and services capabilities in Q1, including introduction of Dell’s 11th-generation servers and significant growth in sales of its EqualLogic scalable, virtualized storage solution. A series of acquisitions has been integrated into cloud-based services for monitoring and managing IT networks for larger customers, which are now being extended to small and medium businesses, first in the U.S.

Brian Gladden, Dell’s chief financial officer, said fiscal first-quarter results are consistent with how the company is managing its business in the present IT spending environment.

“Along with generating strong cash flow, we maintained solid operating margins and made further progress toward reducing annualized costs by $4 billion by the end of fiscal 2011,” said Mr. Gladden.

Global Strategic Business Units

Large Enterprise revenue totaled $3.4 billion, a 31-percent decrease from a year ago, as many large IT customers defer spending. Operating income in the segment was $192 million. The company continued to invest in solutions capabilities that will help drive future growth in enterprise solutions. The 11th-generation PowerEdge servers and Dell Precision workstations are based on the next generation of Intel’s Xeon® processors. Revenue from EqualLogic systems, including the PS6000 series of storage arrays, was up 71 percent.

Public revenue was $3.2 billion, an 11-percent decrease from a year ago. Operating income was $293 million. Growth in Dell’s larger government accounts partially offset weaker demand in other parts of the business. During the quarter Dell and Perot Systems entered an alliance to provide integrated, virtualized healthcare solutions that will help customers improve patient care and reduce costs. Last week the Public business introduced an IT solution developed especially for use in K-12 classrooms, including the “student-rugged” Latitude 2100 netbook; custom “computing stations” for storage, management and networking; and business-class services and support.

Dell sales to Small and Medium Business customers totaled $3.0 billion, a 30-percent decrease from a year ago. First-quarter operating income was $230 million. The company increased its portfolio of tailored resources in the Small and Medium Business Solutions Center, providing SMB customers with new interactive content, industry research, peer communities and enhanced search capabilities.

Consumer revenue was down 16 percent to $2.8 billion in the first quarter, with break-even operating income. Shipments increased 12 percent over last year, as product launches in the quarter included the Adamo by Dell brand. Dell also announced the Studio One 19, a new all-in-one computer, and the Studio XPS 435, for digital-content creation and tech enthusiasts. While further improving the online buying experience at Dell.com, the company expanded customer reach to now more than 30,000 consumer retail outlets worldwide.

Company Outlook

Indicators of global IT demand remain mixed, and the broader environment is still challenging. The company is positioning itself for improvement in IT spending by focusing on customer requirements and their experience with Dell, along with internal operating efficiency and costs.

About Dell

Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology and services they need and value. For more information, visit www.dell.com. To hear a replay of the first quarter analysts call with Michael Dell, chairman and CEO, and Brian Gladden, CFO, go to www.dell.com/investor, or to communicate directly with Dell, go to www.dell.com/dellshares.

Special Note:

Statements in this press release that relate to future results and events (including statements about our future financial and operating performance) are forward-looking statements based on Dell's current expectations. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: weakening global economic conditions and instability in financial markets; our ability to reestablish a cost advantage over our competitors; our ability to generate substantial non-U.S. net revenue; our ability to accurately predict product, customer and geographic sales mix and seasonal sales trends; information technology and manufacturing infrastructure failures and breaches in data security; our ability to effectively manage periodic product transitions; disruptions in component or product availability; our reliance on vendors for quality product components, including reliance on several single-source or limited-source suppliers; our ability to access the capital markets; risks relating to our internal controls; unfavorable results of legal proceedings; our acquisition of other companies; our ability to properly manage the distribution of our products and services; the success of our cost-cutting measures; effective hedging of our exposure to fluctuations in foreign currency exchange rates and interest rates; counterparty default risks; obtaining licenses to intellectual property developed by others on commercially reasonable and competitive terms; our ability to attract, retain and motivate key personnel; loss of government contracts; expiration of tax holidays or favorable tax rate structures; changing environmental laws; and the effect of armed hostilities, terrorism, natural disasters and public health issues. For a discussion of those and other factors affecting our business and prospects, see Dell’s periodic filings with the Securities and Exchange Commission. We assume no obligation to update forward-looking statements.

Consolidated statements of income, financial position and cash flows follow.

Dell, Latitude, Inspiron, Dell Precision, PowerEdge and Dell EqualLogic are trademarks of Dell Inc.

Dell disclaims any proprietary interest in the marks and names of others.

 Q1 FY'10 Financial Statements in .pdf Format