Shareholder Meeting

Today Dell held its 2009 annual meeting of stockholders in Austin, Texas. This meeting comes on the heels of our analyst meeting earlier this week and gives us the opportunity to share our views directly with our shareholders that attended either in person or online via the webcast.

The meeting included presentations by both our CEO Michael Dell and CFO Brian Gladden, which can be downloaded from the Shareholder Meeting Event page. Key messages from Michael included his reiteration of Dell's strong core assets, the company's drive toward a consistent and disciplined operating agenda, the improvement of its core business in each of the business units, and its expansion of capabilities in the enterprise to deliver customer-focused solutions.

To elaborate, one of Dell's key advantages is its set of strong core assets including its large installed base and direct customer relationships. Dell is able to leverage these assets, acting quickly to meet the needs of our customers with disruptively great value and IT simplification. Dell is focused on continuing to provide this value that customers have come to know and is committed to providing a broader set of customer solutions through organic investments and strategic alternatives. This strategy should allow Dell to steadily shift its portfolio to higher margin offerings and more valuable businesses.

Brian provided a financial update to shareholders and outlined Dell's operating agenda for FY2010. We are currently experiencing one of the most difficult macro-economic environments of our time, but even before the downturn Dell had made the decision to operate with a specific agenda: 1) focus on prioritizing profitability; 2) protect our strong balance sheet and improve working capital focus; 3) aggressively take costs out of the company and deliver at least $4B in cost savings; 4) recapture product leadership through improved design and solutions; 5) target growth in emerging countries; and 6) evaluate and invest in growth initiatives that shift our portfolio to higher margin offerings.

Moving to the formal business portion of the meeting, we had four proxy proposals voted on this year. According to preliminary results, the two routine company proposals both passed. The election of directors passed with favorable votes for each director of at least 83% and the ratification of our independent auditor passed obtaining at least 99% of the total votes cast "For" the proposal. In addition, two stockholder proposals were presented this year: Proposal 1 - Reimbursement of Proxy Expenses and Proposal 2 - Adopting a Simple Majority Vote. Proposal 1 did not pass, receiving 35% votes "For" the proposal; however, Proposal 2 was approved, receiving 69% votes "For" the proposal. Final results will be posted on the event page once they are available.

After the formal vote, Michael, Brian and I took questions from the audience and via online submissions for about 20 minutes before wrapping up the meeting.

Ultimately, Dell will continue to provide disruptively great value to its customers while balancing its financial goals of liquidity, profitability, and growth. Michael and Brian both commented on this focus throughout their presentations today, so I encourage you to listen to the replay of the meeting.

Thanks for following us on DellShares.

-Rob

In conjunction with our July 17th Annual Meeting of Stockholders, we filed our proxy statement on Monday, June 1^st and will begin mailing notices to shareholders on Friday, June 5^th.  As a shareholder, once you receive your notice in the mail, you can access the voting page online where you will find: the proxy statement, our form 10-K annual report, a link to our 2009 Interactive Year in Review and information on the time and location of the annual meeting.

In this year's proxy filing, we have two routine company proposals: the election of directors and ratification of our independent auditor.  In addition, we have two stockholder proposals: reimbursement of proxy expenses and the adoption of a simple majority vote.  In the proxy, you will find details on each of these proposals as well as the Board's statements in support or opposition.  Whether you are a current shareholder or simply an interested individual, we encourage you to review our proxy statement. 

In addition to the proxy statement, we also encourage you to visit our online Fiscal Year 2009 Interactive Year in Review, which contains a letter from Michael reiterating Dell's focus on customers from its first days in 1984 through the last 25 years and beyond. He also describes the company's ability to transform and meet customers' needs and requirements. Our online interactive year in review is one example of this innovative change. Last year, Dell was one of the first to launch a completely online and interactive year in review, which not only created a better user experience for our visitors, but also helped reduce our global footprint by reducing our paper usage.

This year, we leveraged the success of the 2008 year in review and are excited to offer even more interactive features. The 2009 Year in Review offers more content-sharing features, better search capability, online community conversations, a video player and links to customer case studies. We also added a downloads page where you will find downloadable files of the sections of our annual report on Form 10-K filed with the SEC on March 26, 2009, as well as full downloads of the 10-K and the Chairman's letter.

We value your opinion and your vote.  Shareholder feedback enables us to serve you better.  Proxy voting is an important means by which you as an investor can have a say in the business operations and activities of Dell.  We look forward to seeing those of you who are able to join us on July 17^th for the annual meeting.  As always, we encourage you to ask questions or leave comments on Dell Shares. 

Starting today and through Saturday, we are attending The World Money Show in Orlando, Florida - one of several annual conferences that provide a venue for individual investors to learn more about best practices of investing and financial planning. This year, The World Money Show will feature more than 300 workshops and 150 speakers with an opportunity to hear leading experts talk about the global economy, investments and personal finance.  It is a great way for you to learn via panels and workshops in addition to interacting with company representatives and investor relations professionals.

So why are we attending this event? Individual investors own roughly 20% of Dell and this is one of many opportunities for us to meet directly with you - our current and potential shareholders. We are fully committed to our retail shareholder program and believe it is especially important during times of economic uncertainty and market volatility to reinforce the face-to-face relationship we have with our individual investors.  

Prior to this event, we also attended three individual investor conferences last year - The World Money Show Orlando in February, The Better Investing National Convention in Schaumburg in June and the Money Show in Washington DC in November.   We will also be attending The Better Investing National Convention in Atlanta in June of 2009. 

At this event, we will be at booth #303 in the Exhibit Hall of the Gaylord Palms Resort and Convention Center in Kissimmee, Florida, today through Saturday. We hope you will stop by and check out our booth!

We held our annual shareholder meeting for fiscal year 2008 today in Austin.  This was a great opportunity to introduce our new CFO Brian Gladden to our shareholders and to showcase some of the new products we have recently introduced.  If you haven't already done so, I would encourage you to check out our revamped website and new products like our XPS and Studio laptops, which are truly best-in-class.

At the meeting, Michael provided an update on the progress the company has made on the long-term goals he laid out at the analyst meeting in April, including the $3 billion cost opportunity and our five core growth priorities. Brian provided a financial update to shareholders including where we stand on the commitments that we made at the last shareholder meeting.  These initiatives are to improve our financial systems and processes, grow faster than the addressable opportunity, improve profitability and competitiveness, and maximize cash flow.

I'd like to elaborate a little on the commitment to maximize cash flow because cash flow generation is a critical measure of the success of any business and the preeminent driver of shareholder valuation creation.  By virtue of our business model, we have outstanding cash flow generation capabilities.  For example, our cash flow from operations over the past four quarters was $4.2 billion and more than $22 billion over the past five years, and through a tough business cycle, we grew cash flow from operations per share from $1.55 to $1.76 in the past five years.

So, what drives cash flow from operations?  Cash flow from operations, an accounting metric, is calculated by taking net income from the income statement and adjusting for balance sheet items that relate to operations - mostly working capital accounts such as accounts receivable, inventories, prepayments, accounts payables and accruals.  You can find cash flow from operations by looking at our cash flow statement.  The Primary working capital accounts - accounts receivable, inventories, and accounts payable collectively drive a company's cash conversion cycle (CCC) and at Dell, we have a negative CCC which is a favorable attribute.  It fundamentally means that we are highly efficient at managing these working capital accounts.

About now you are likely asking why does this all matter?  Well the answer is that the intrinsic value of any enterprise (or company security in this case) is equal to the discounted (present) value of the future stream of economic benefits that an investor expects to receive from the asset.  Said differently, investors discount the future cash flow streams back to present value and add them up to determine the current value of a company or stock.

Ultimately, our focus on cash flow generation stems from the recognition that it is used as a proxy for cash profits and as the primary input for determining value in fundamental securities analysis and we are confident in our ability to continue generating positive cash flows from operations going forward.  Michael and Brian both commented on this focus throughout their presentations today, so I encourage you to listen to the replay of the meeting.

We had five proxy proposals voted on this year.  The company presented three routine proposals including the election of directors, the ratification of our independent auditor, and the approval of the executive annual incentive bonus plan.  All three proposals passed with the number of favorable votes obtaining at least 89% of the total votes cast.  In addition, two stockholder proposals were presented this year:  Proposal 1 - Reimbursement of Proxy Expenses did not pass, receiving 63% votes "Against" and 33% votes "For" the proposal and Proposal 2 - Advisory Vote on Executive Compensation, which also failed to pass as results were 60% votes "Against" and 37% votes "For" the proposal.

The meeting may be over, but we value your feedback and questions.  We encourage you to be a part of the conversation through this blog as it provides an additional means of two-way communication outside of the traditional annual meeting.

Starting today and through this weekend, we are attending the Better Investing National Convention in Schaumburg, Illinois - one of several conferences from the National Association of Investors Corporation (NAIC) that cater to individual investors.  The conference is set up as a means for individual investors to learn best practices for investing and more about financial planning.  The conference hosts classes, seminars and conversations with investor relations professionals from exhibitors and corporate sponsors.

So why are we there you ask?  Individual investors own roughly 20% of Dell and this is one of many opportunities for us to be involved in direct relationships with you, our current and potential shareholders.  This conference is yet another way to interact with company representatives, educate yourself and become informed and knowledgeable about us and other companies.  We will also be attending other conferences such as the Money Show in Washington DC, November 6-8, 2008 and The World Money Show in Orlando, FL, February 4-7, 2009.  Moreover, we look forward to seeing our stockholders at the 2008 Annual Meeting of Stockholders that will take place on July 18^th here in Austin, Texas. 

We'll be at the Renaissance Hotel in Schaumburg, Illinois. Come see us at booth #214 - we hope to see you there.