Dell Shares

CFO Brian Gladden Discusses Dell Q3 Fiscal Year 2010 Performance

2009-11-19T21:38:00Z

I am pleased to have Brian Gladden, Senior Vice President and CFO, join us on Dell Shares to provide his views on the third quarter, the economy, industry demand, and the Perot acquisition.

Dell announced third-quarter fiscal-year 2010 financial results on November 19^th. Dell reported improved business performance with revenue up 1% sequentially to $12.9 billion. EPS was $0.17 per share and operating expenses were down 10% versus Q3 last year. In addition, cash flow from operations was strong again at $801 million and $3.4 billion over the last four quarters, which is up 42 percent from the previous four quarters.

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I strongly encourage you to read the full press release and earnings presentation; and listen to our conference call that can be found on the investor relations web site. As always, we encourage you to ask questions or leave comments on Dell Shares.

Best,

Rob

SRI in the Rockies

2009-10-29T15:13:00Z

We just got back from SRI in the Rockies where I had an opportunity to meet with several socially responsible investors and stakeholders. Dell was happy to be a sponsor and help celebrate SRI in the Rockies 20th anniversary. This is an important event that brings together a community of investors, stakeholders and academics all focused on creating a cleaner environment, more socially responsible business practices, and better working conditions for everyone.

I held a short group presentation to discuss engagement between our corporate responsibility and IR function and our stakeholders at large. Engagement with our stakeholders has always been an important part of raising our awareness at Dell. We began more than 12 years ago when I first received a call to fill out a SRI survey and we had no corporate responsibility team at the time. We went out to disparate groups throughout the organization to answer most of these questions.

Today things have changed significantly. We have a strong Corporate Responsibility team and through involvement of stakeholders like you, Dell took a leadership position in becoming the first company to offer a free consumer recycling program, the first to become operationally carbon neutral, and now we publish our list of Tier 1 suppliers. Every product we make is more energy efficient and has a bottom line effect for both our customers and Dell.

Our progess here has been more of a journey and you, the stakeholders and SRI community, have always been there steering and mentoring us as we go. During our discussion, one of our long time friends in this process has been Tim Smith from Walden Asset Management who has always counseled us on important issues. We appreciate this candid feedback. To Tim and others, we say that we appreciate your help, and look forward to your continued help and involvement.

Please take a look at our Corporate Responsibility report. We have made a lot of progress but there is always more to do. If you have feedback, please share it.

Thanks. And we look forward to next year's SRI in the Rockies conference in San Antonio.

Launching Windows 7 – Will it generate an upgrade cycle?

2009-10-16T15:33:00Z

As we meet with investors, we have been getting a lot of questions about a pending corporate upgrade cycle and whether Windows 7 will be a catalyst for PC demand.

First, let me say that we're very excited about the Windows 7 launch next week. Dell is one of Microsoft's biggest OEM partners, and due to a collaborative engineering effort that extends over the past three years, we really feel customers will reap the benefits from upgrading to Win7. Windows 7 has some very compelling features ranging from better applications and drivers to faster boot times and quick online capabilities.

So why Windows 7?

Beginning with boot time - it's fast. Windows 7 uses less memory to boot the OS than Vista. Microsoft removed unnecessary services and drivers from automatically loading, which reduces the boot time and the OS footprint occupied in memory. The user interface also has several cool new features. Jump lists or pinned applications facilitate opening recently viewed items, such as files, folders, or websites in a more organized fashion. And the snap feature allows you to snap two windows to the side of the screen and compare them side by side with ease.

Windows 7 makes it easier than ever to go mobile. Improved wireless connectivity results in less time to locate and connect to a network. And with location aware printing in the Professional and Ultimate versions of Windows 7, you no longer have to manually switch printers when moving from home to work or network to network. In addition, it can also run in XP mode which is great for customers that need a way to deal with legacy applications that aren't compatible with Vista or Windows 7. Clearly, these are just a few of the cool features you will find, so check out more details in our Direct2Dell blog.

As Michael recently stated regarding the use of Windows 7, "You will love your PC again".

What about a corporate PC upgrade cycle?

In commercial accounts, increases in information technology spending are most strongly correlated with improvements in corporate profitability and that will be the key driver of a commercial refresh. Specific to Win7, we have only seen about 30% of our commercial customers adopt Vista with the rest staying on older operating systems. With a weak economy, the installed base has increased to about five years for desktops and 3-4 years for notebooks. So many of our customers are working with older machines and running an operating system that is almost 8 years old. This coupled with the fact that new PCs are faster, considerably more energy efficient, and have much better graphics capabilities make for a compelling upgrade.

We're also working with Microsoft on the launch of Windows 7 next week, and on the upcoming launch of Office 2010. Everything we see right now from the direct conversations with customers to surveys with CIOs tell us an upgrade cycle is forthcoming and likely in 2010 - helped by Win7 but really driven by an improving economy.

Dell Files Tender Offer for Perot Systems

2009-10-02T15:02:00Z

We're moving right along with the acquisition of Perot Systems! Today, we commenced our tender offer to acquire the company.

What is a tender offer you ask?

The tender is a formal process of making a public offer directly to Perot's shareholders to buy their shares at the previously stated price of $30 per share. The offer was filed with the Securities and Exchange Commission. To learn more, I encourage you to read the tender offer, the press release we issued, and take a look at the ad that appears in today's Wall Street Journal.

We've taken some other steps getting us closer to closing the deal. Since the merger announcement on September 21, we have submitted competition law filings in the United States and some other countries. As a result, we are now in a waiting period that the government may choose to shorten or extend pending any antitrust concerns. These filings and waiting periods are pretty typical for any transaction of this type.

We have also begun integration planning with Perot Systems. Teams are being put in place to oversee this integration planning, which includes organizational resource alignment, financial reporting implications, systems integration plans, and other typical things associated with an integration process. While we are engaged in the planning process, we are also mindful that that we cannot combine the two companies until we close the transaction.

So what happens next with the tender offer?

Unless extended, the tender offer begins today and ends at midnight on November 2. Perot shareholders have this period to tender their shares for the offer price of $30 per share. Upon acceptance for payment of shares in the tender offer, Perot Systems becomes a subsidiary of Dell.

Today's news represents the next step in the acquisition process, and when completed, this bigger and better Dell is expected to help customers grow and thrive with a broader range of IT services and solutions.

We look forward to sharing with you more details through this exciting process. Once we close on the acquisition, you'll be hearing more detailed thoughts about our services strategy, organization, key initiatives and financial information. At that time, Dell leaders will provide more detail around our growth, synergy and integration plans.

Until then, your questions and comments are welcome.

SPECIAL NOTE: This blog post is for informational purposes only, and is not an offer to purchase or a solicitation of an offer to sell securities. The tender offer is being made only pursuant to the Offer to Purchase, Letter of Transmittal and related materials that Dell and DII- Holdings Inc. have filed with the SEC on a Tender Offer Statement on Schedule TO on October 2, 2009. In addition, Perot Systems has filed a Solicitation Recommendation Statement on Schedule 14D-9 with respect to the tender offer on October 2, 2009. The Tender Offer Statement (and related materials) and the Solicitation/Recommendation Statement contain important information that should be read carefully before any decision is made with respect to the tender offer. Those materials may be obtained free of charge from D.F. King & Co., Inc., the information agent for the tender offer, toll-free at (800) 488-8095 (banks and brokers call collect (212) 269-5550). In addition, all of those materials (and all other offer documents filed with the SEC) are available at no charge on the SEC's website at www.sec.gov.

Dell - Perot Systems

2009-09-21T11:00:00Z

Today, Dell and Perot Systems entered a definitive agreement for Dell to acquire Perot Systems in a transaction valued at $3.9 billion. Terms of the pairing were approved by boards of both companies.

We anticipate the combination will close by end of Dell's fiscal 4th quarter, pending regulatory approval, and will be funded with existing cash. Perot Systems' current CEO, Peter Altabef will lead the combined services units of joint Perot Systems' and Dell's services units. The new business unit will be called Perot Systems, a Dell Company and will be run out of Perot's current Plano, Texas campus.

This acquisition is about our strategy to provide next-generation IT service delivery and grow our enterprise revenue base. This is a key acquisition in our strategy to transform the company and IT services will be a significant part of our strategy and we have been focused on finding the right asset in this space, which Perot Systems provides. Perot Systems' expertise in infrastructure & operations, business processes, application development services strongly complements Dell's existing services offerings and global reach. Not only do they have a robust services portfolio, but they have tremendous segment expertise, including growth areas such as healthcare and government.

This combination allows Dell to gain a scalable asset that we can leverage our direct customer footprint to build out rapidly. We think we can add on other assets (including ours), and globalize Perot Systems into a strong global service company. Perot Systems' world-class services innovation brings several key service offerings we don't enjoy today. Another critical element to understand regarding this announcement is that Dell and Perot Systems are very familiar with each other from a capability and cultural standpoint. We have enjoyed a longstanding relationship over the past several years and with our announcement today take this relationship to the next level, which will allow us to deliver the best possible value for our customers. The pairing results in a compelling combination of companies that have similarly strong, relationship-based business cultures, and that are known for focus on helping customers thrive by using IT for greater effectiveness and productivity.

There will be more details about this acquisition once we close and satisfy the customary regulatory requirements involved. In the end, our strategic mission remains the same -- to provide disruptively great value to our customers... while balancing our financial goals of liquidity, profitability, growth. Thanks and we welcome your questions as always.

Rob

Additional Information

The planned tender offer described in this blog posting has not yet commenced. The description contained in this blog posting is not an offer to buy or the solicitation of an offer to sell securities. At the time the planned tender offer is commenced, Dell will file a tender offer statement on Schedule TO with the Securities and Exchange Commission (the "SEC"), and Perot Systems will file a solicitation/recommendation statement on Schedule 14D-9 with respect to the planned tender offer. The tender offer statement (including an offer to purchase, a related letter of transmittal and other tender offer documents) and the solicitation/recommendation statement will contain important information that should be read carefully before making any decision to tender securities in the planned tender offer. Those materials will be made available to Perot Systems's stockholders at no expense to them. In addition, all of those materials (and all other tender offer documents filed with the SEC) will be made available at no charge on the SEC's website: www.sec.gov.

CFO Brian Gladden Discusses Dell Q2 Fiscal Year 2010 Performance

2009-08-27T17:16:00Z

I am pleased to have Brian Gladden, Senior Vice President and CFO, join us on Dell Shares to provide his view on the second quarter, the economy, industry demand, and the company's outlook.

Dell announced second-quarter fiscal-year 2010 financial results on August 27th. Dell reported improved business performance with revenue up 3% sequentially to $12.8 billion. EPS was $0.24 per share and operating expenses were down 14% versus Q2 last year. In addition, cash flow from operations exceeded $1 billion.

Best,

Rob

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Dell's Director of Sustainability, Tod Arbogast, Discusses FY09 Corporate Responsibility Report

2009-08-24T20:42:00Z

Today Dell issued its FY09 Corporate Responsibility Report. I sat down with Tod Arbogast, Director of Sustainability, to discuss a range of topics regarding the report including Dell's achievements in Corporate Responsibility, engagement with the SRI Community, and how this area will evolve over time.

Please don't hesitate to post your questions/comments directly on Dell Shares or call or email us directly if you have any questions regarding this post.

We will also attend SRI in the Rockies in October and hope to see you there.

Best,

Rob

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If you can't see the video above, please click here.

A Discussion Regarding Dell’s Consumer Brand Architecture

2009-08-17T20:28:00Z

Over the past year, we have discussed some of the changes in our Consumer Segment, including our strategy to expand our product portfolio, as well as expand our retail and global footprint. Coming off our recent analyst meeting, we thought it would be timely to further delve into the distinctive brands that represent the Consumer product portfolio and its on-going expansion.

The thought behind our product expansion and new brand architecture was to enhance our efforts to be more precise in targeting specific user needs, preferences and price bands as opposed to our past practice of utilizing only a few platforms to serve a wider array of customer needs. This allows Dell to offer greater choice and establish clear value propositions for each brand in our direct and retail businesses. In addition to offering more choice, this expansion supports our growth plans and helps to improve our relative cost position, as systems are designed around specific components and features for a given usage model.

There are five main brands that comprise the consumer line-up: Dimension, Inspiron, Studio, Alienware and Adamo. These brands run the full spectrum of the consumer space from entry level to high performance. The Dimension represents the "value" space, and provides accessibility to technology and features that enable a price point for the cost sensitive consumer. The Inspiron brand is more about expression and designed for those who value simplicity and personalization. The Studio line takes personalization another step with digital customization. It is aimed at unleashing the multimedia experience with enhanced graphics and audio performance. For those interested in a premium, luxury experience, we introduced our Adamo line this past spring. This line places significant emphasis on precision craftsmanship and premium materials that provides an uncompromised, sleek design. There is one other aspect of the line-up with respect to the XPS moniker, which indicates that a particular model is at the top of that brand in terms of performance and feature sets.

Our last brand in the consumer line-up is Alienware, which is dedicated to gamers. It is about delivering an immersive gaming experience with best-in-class performance and speed. Gamers demand and seek out performance innovation, and we are confident that Alienware will continue to be the top destination in their quest. As with XPS moniker, the Alienware brand deploys a similar value proposition with the ALX moniker, which designates a product as the "best of the best" in the Alienware portfolio.

You should expect Dell to continue to build out each of these brands with additional models as we expand our retail and direct businesses. Our models have undergone significant style and industrial design changes over the past two years, and we are focused on design leadership going forward. With this new brand architecture, we have set the foundation to sell more systems into more geographies and outlets. This sets up our larger goal of becoming more competitive from a cost standpoint as we work to deliver improved profitability and continued growth in the consumer segment. We believe we are starting to see progress on a number of fronts both in product recognition and in unit sales. Our consumer products have won over 14 product design awards in the first half of this year. Ed Boyd and his team, as well as the design team from the commercial side of the business in the last year won more design awards in one year than the previous 24 years combined. In addition, our consumer segment has posted double-digit percentage unit gains each of the last four quarters, with WW share of 9.3% as of the end of Q1 per IDC.

Steve Felice, President of Small and Medium Business, Discusses SMB Business Environment

2009-07-28T18:09:00Z

As a follow-up to our Analyst meeting, I recently sat down with Steve Felice, president of Small and Medium Business, to discuss a range of topics that have received investor attention including:

Dell's Go-to-Market Strategy
Differentiation in the Channel
Indirect Model in Asia
Current Macro Environment

Please watch the video below. If you would like to get more details from our analyst meeting, you can view the presentations and webcast from this meeting by clicking here. As always, I look forward to your questions and comments!

-Rob

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2009 Annual Meeting of Stockholders and Proxy Voting Results

2009-07-17T14:38:00Z

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