Dell Shares : Operations

CFO Brian Gladden Discusses Dell Q1 Fiscal Year 2010 Performance

Robert L Williams — Thu, 28 May 2009 20:15:00 GMT

Dell announced first-quarter fiscal-year 2010 financial results on May 28^th. Brian Gladden, Senior Vice President and CFO, discusses the results and the company's outlook. Please review earnings materials on the Dell Investor Relations Q1 events page. All comparisons are year-over-year unless otherwise noted.

We announced Q1 results today. Revenue was down 23% to $12.3 billion. EPS was $0.15 per share and cash from operations was $761 million.

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

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Also, we strongly encourage investors 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.

Jeff Clarke, Vice Chairman, Technology and Operations, Discusses Progress on $4B Cost Initiative

Robert L Williams — Fri, 17 Apr 2009 14:50:00 GMT

I recently sat down with Jeff Clarke, Vice Chairman, Technology and Operations, to discuss a range of topics that have received investor attention including:

Declining Client ASPs in the commercial customer business
Desktop and mobility virtualization
Progress on our $4 billion cost initiative
Optimization of our global manufacturing and logistics network
What we are going to do with the savings we realize from some of these initiatives

As always, I look forward to your questions and comments!

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CFO Brian Gladden Discusses Dell Q4 Fiscal Year 2009 Performance

Robert L Williams — Thu, 26 Feb 2009 20:04:00 GMT

Dell announced fourth-quarter fiscal-year 2009 financial results on Feb. 26. Brian Gladden, Senior Vice President and CFO, discusses the results and the company's outlook. Please review earnings materials on Dell Investor Relations Q4 events page. All comparisons are year-over-year unless otherwise noted.

We announced Q4 results today. Revenue was down 16% to $13.4 billion. EPS was $0.18 per share and cash from operations was $729 million. For the full year fiscal 2009, revenue was $61.1B and EPS was $1.25. Cash flow from operations was $1.9B, and we completed the year with $9.5B in cash and investments.

Each quarter we evolve the format here on Dell Shares to provide you with a little more insight into what is going on in our business. This quarter, instead of writing our traditional earnings blog, I am pleased to have Brian Gladden join us on Dell Shares to provide his view on the fourth quarter, the economy, industry demand and the company's outlook.

(Please visit the site to view this media)

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

Anticipated Q4 Expense Items Toward $3 Billion in Cost Reductions

Lynn Tyson — Wed, 28 Jan 2009 20:45:00 GMT

In March last year, we announced actions to enhance the company's competitiveness, improve our cost structure and optimize operations. At that point, we announced the closure of desktop manufacturing in Austin. More recently, we announced a new global segmentation and the migration of computer systems production in EMEA to Dell facilities in Poland and contract manufacturers by the beginning of Dell's fiscal 2011. The combination of these efforts, in addition to a revitalization of our entire product and service portfolio , continue to help us drive toward delivering on $3 billion in annualized cost savings by the end of fiscal 2011.

Today we announced that we expect to recognize in our fiscal 2009 fourth quarter a pretax expense of $135 million associated with further optimizing our global manufacturing and distribution network, and the continued rationalization of Dell's workforce.

In addition, we will incur $145 million in pretax, non-cash stock option expense, including $106 million in accelerated vesting of previously awarded stock options. Dell routinely evaluates its compensation program, including the use of stock options. The acceleration, effective Jan. 23, covers 20.4 million shares with a weighted-average exercise price of $22.02. The action means Dell will recognize all expenses associated with these options in Q4, rather than over time. This action is a non-cash expense based on SFAS 123R stock option accounting. The remaining $39 million of stock expense is related to an annual true-up of full-year stock-based compensation forfeitures.

Together the cost-reduction and stock-option actions will total pretax $280 million, or 11 cents per share. The company will announce its Q4 and full fiscal-year 2009 financial results on Feb. 26.

Brian Gladden, CFO, Sits Down to Discuss Dell's New Global Segmentation and Business Units

Robert L Williams — Tue, 13 Jan 2009 14:46:00 GMT

Thanks for joining us on Dell Shares. I recently sat down with Brian Gladden, Senior Vice President and CFO, to discuss our recent announced actions to further globalize our operations around four key customer segments including large enterprise, public, and small and medium businesses. In this conversation, I ask Brian about what this new organization means for Dell, its customers, and why now was the right time to make this change. We also touch base on the impact of this announcement on our financial statements and reporting structure and how this affects our broader cost savings initiatives.

I invite you to watch the v-log. We will respond to your questions and comments posted on this blog site as well as via email and over the phone. We look forward to hearing from you! Thanks!

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3Q Earnings - Executive Q&A

Lynn Tyson — Thu, 20 Nov 2008 21:05:00 GMT

Chairman and CEO Michael Dell and CFO Brian Gladden Discuss Dell Q3 Fiscal Year 2009 Performance Dell announced third-quarter fiscal-year 2009 financial results on Nov. 20. Michael Dell , chairman and CEO, and Brian Gladden , discuss the results and the...(read more)

Dell Maintains Ownership of Dell Financial Services

Lynn Tyson — Tue, 16 Sep 2008 16:00:00 GMT

On March 31^st we announced several actions we were undertaking to improve the overall competiveness of the company. One of these actions included a strategic assessment of ownership alternatives for Dell Financial Services (DFS), focused primarily on the consumer and small/medium business revolving credit financing receivables and operations in the U.S.

We conducted this assessment to evaluate whether: (1) DFS could provide enhanced products and services, (2) we could accelerate the investments we are making in DFS and, (3) or whether there were more efficient ways to fund DFS.

We have now completed this assessment and have decided that Dell should continue its ownership of Dell Financial Services as a wholly-owned subsidiary of Dell. We believe that our current approach is in the best interest of our customers and our company. We are committed to continued investment in our financing business to expand its product portfolio and provide financing solutions that enable and enrich our customers' experiences.

DFS's key activities include the origination, collection, and servicing of customer receivables related to the purchase of Dell products. To learn more about DFS, please refer to Note 5 "Financial Services" of our recently filed fiscal year 2009 10Q.

Dell Sees Further Softening in Global End-User Demand

Robert L Williams — Tue, 16 Sep 2008 11:00:00 GMT

When Dell announced Q2 financial results on Aug. 28, 2008, we reported continued conservatism in IT spending in the U.S., which had extended into Western Europe and several countries in Asia. The company is seeing further softening in global end-user demand in the current quarter and we felt it was important to share that with investors.

Dell will continue to execute against its five growth priorities of global consumer, small and medium business, enterprise, notebooks and emerging countries. The company expects to incur costs as it realigns its business to improve competitiveness, reduce headcount and invest in infrastructure and acquisitions, but is committed to working aggressively on cost initiatives that will benefit its P&L over time with improved growth, profitability and cash flow. The company grew unit shipments faster than the industry in the first half of calendar 2008 and expects to grow faster than the industry for the full year.

In addition, Dell Senior Vice President & CFO, Brian T. Gladden, will address investors at the Bank of America Conference in San Francisco today, Tuesday, September 16. Brian will talk about the company's strategic priorities and then take questions from the audience. Brian's remarks will be Webcast live at 1:00 p.m. CT, and then be accessible via replay online at http://www.dell.com/investor. I encourage you to listen in. In addition, the company will report third quarter fiscal year 2009 results Nov. 20, 2008, after the close of market.

Dell Equity Analyst Meeting – Day 1

Robert L Williams — Wed, 02 Apr 2008 18:40:00 GMT

Today, 250 equity analysts and institutional investors joined us in Round Rock for Dell's equity analyst meeting. These meetings, which are available via live webcast, serve two important purposes. First, they give this audience and all of you an opportunity to hear directly from Dell's senior leadership, and second, it's our chance to help you understand where we're going financially, share our key initiatives and address questions and concerns.

The meetings and briefings are spread over two days, with the first day being a prerequisite to discussing our growth priorities on day two. We spent the first day providing a framework by which investors could understand the fundamental changes we're making to Dell's business model - from manufacturing to channels to services.

Dell has always been known for its direct model. With it, we created a direct customer relationship model and build-to-order manufacturing capability like the world had never seen. Our assets were global and our cycle times were some of the shortest in the industry.

But today's PC economics are much different. Moore's law led to better performance, rapid growth and lower selling prices, ultimately leading to smaller absolute cost advantages. And growth shifted from desktops to notebooks and from large enterprise customers to consumers and small enterprises. Our customers are more diverse than ever before. We now need to serve them in very different ways.

Mike Cannon, President of Dell Global Operations, talked about how Dell is optimizing its global manufacturing network to better meet customer needs. By matching product design to customer segments, we're able to eliminate embedded product costs. Getting this part right actually enables us to think more broadly about our manufacturing model and enhance the value we provide our customers.

Many have also questioned how being direct works with channel. The reality is that we have a $10 billion global partner business that we've steadily built for 23 years. Paul Bell, SVP & President of Dell Americas, spoke to our channel strategy and the investments we're making to better work with VARs and systems integrators. The flexible engagement model we've developed is backed by a compelling value proposition for our partners: our strong brand; a broad portfolio of industry-leading products; and simple, beneficial terms. It's designed to minimize conflict while building trust and mutually beneficial relationships. Since we announced this new initiative in Q3, we've worked hard to bring our regional partners onboard to make our solutions available in the geographies that need them most.

Steve Schuckenbrock, SVP Global Services & CIO, spoke about how customers spend a massive share of their IT budgets on services and how they face a burning need to shift this spend from maintenance to innovation. We approach services very differently from our competitors. We believe services should be customizable, a la carte, and available remotely. So Dell's new services model combines disruptive technologies with our core strengths to provide customers convenient and affordable enterprise-class support and monitoring services. Through ProSupport and the assets we acquired through several acquisitions we are building a platform that allows us to remotely manage the client lifecycle. We let customers choose which services they want and when they want them. And we provide solutions where consultants are available - but not required. We have a $6.2 billion global services business today, and there is no reason it can't double over the next 3-4 years.

These are changes in the way Dell interacts with customer. They set a foundation upon which we'll build our future success.

If you haven't already seen the webcasts or presentations, I encourage you to watch a replay of them here.

Dell Driving Actions to Enhance Competitiveness and Optimize Operations

Lynn Tyson — Mon, 31 Mar 2008 17:12:00 GMT

I know that sounds like a mouthful, so let me take a few minutes to discuss what we announced today. In May of last year, we announced we were taking steps to improve the competiveness of our operating model, profitability and cash flow. Restoring competitive advantage means fixing things in our business that will allow us to provide even more value to our customers - and investing in things that will allow us to deliver better and more products and services to our customers around the world.

Improving profitability means just that and this can be achieved by improving our cost position which is embedded in cost of goods sold (COGS) - like designing products that have the right features for our customers - things they want and value. Operating expenses (Opex) is also a part of profitability and we believe we can do a better job of managing these expenses - things like reducing headcount (net of acquisitions) and moving more of our people to front line positions - positions that actually touch the customer. And when you generate profits - cash flow follows. At least this is the case for Dell. On an annualized basis we typically generate operating free cash flow in excess of net income - so the more net income we generate - the more cash we generate. And at the end of the day it's cash that fuels shareholder value.

So in our press release we said we believe we have a $3 billion opportunity to reduce total costs - this includes both COGS and Opex. Now this does not happen over night. In fact we said we believe it will take three years to achieve an annualized savings of $3 billion. This means that before you adjust for growth, we believe our costs at the end of our fiscal 2011 will be $3 billion lower than at the end of fiscal 2008. A company can do several things with this benefit. They can use it to strengthen their competitive position and invest back into their business which helps drive growth, they can use it to improve profitability, or they can do both. We will use it for both - and the split will depend on a variety of things including marketplace dynamics and our growth initiatives.

In our release we also announced that we will be closing our desktop manufacturing in Austin, Texas. Over the last three years, driven by the massive shift in customer preference for notebooks - especially among consumers, industry forecasts for the rate of growth of desktops have declined from 10.8 percent to 3.6 percent. And the desktop to notebook mix in the U.S. has declined from a 70/30 split in 2005 in favor of desktops to a 50/50 split today. Our fiscal fourth quarter of last year reflects this change as we grew notebook units year over year by 37 percent and desktops by 10 percent.

Lastly - in our release we announced we would undertake a strategic assessment of ownership and operating structure alternatives for our Dell Financial Services financing activities. And that this assessment will primarily focus on the consumer and small/medium business aspect of this business. We acquired the remaining 30 percent of DFS from our partner, CIT, in December of last year.

There is a lot of concern out there right now about the credit markets and we've been getting a lot of questions so let me clarify two things relative to Dell.

First, our assessment of our DFS business is unrelated to what is going on right now in the credit markets - we completed the acquisition and so the natural next step is to pursue our strategy, simple as that. Many companies - GE and Target - to cite recent examples - often assess the ownership structure of their financing companies. In our case we are primarily evaluating three key things: (1) can DFS provide even better and most robust product offerings to our customers, (2) can we accelerate the investments we are making in DFS and, (3) are there more efficient ways to fund DFS. Our assessment may result in no change, or a sale to or partnership with a fully dedicated financing company.

Second, relative to our consumer financing receivables - less than 20 percent of our net customer receivables - or $1.6 billion - were to subprime customers. This percentage is similar to what it was in our fiscal third quarter. Based on our assessment of these customers financing receivables and the associated risks, we believe we are adequately reserved. If you are interested in this topic I encourage you to read Note 2 Financial Instruments, and Note 6 Financial Services of our Fiscal 2008 10K that we filed today.

To get an update on all of the initiatives we have underway at Dell - I encourage you to listen to our equity analyst meeting which will be held in Round Rock, Texas on Wednesday April 2^nd and Thursday April 3^rd. You can reach the web cast and accompanying slides via this link: Dell Analyst Meeting. If you can't listen right away - it will be up on our web site for a while.