Dell Financial Analyst Meeting 2012 #DellAM12

On Tuesday June 12th and Wednesday June 13th, Dell held its 2012 Analyst Meeting in Austin, TX.  Over 120 analyst and investors attended the event to hear from Dell’s executive leadership team to better understand some  strategic proof points of success and long-term vision.  Dell has evolved to an end-to-end solutions provider, and throughout the conference, our executive team consistently messaged that Dell is moving towards becoming a fundamentally different company than we were just a few years ago.  The event began with solutions breakout sessions that focused on current solutions offerings and Dell’s competitive differentiation. The sessions offered attendees an opportunity to better understand some of the fastest growing areas of our business.

On Wednesday, CEO Michael Dell and CFO Brian Gladden kicked off the event discussing how Dell is delivering on its commitments of developing and acquiring key intellectual property, delivering solutions that customer value, and capturing a growing share of the IT profit pool.  We continue to focus on creating end-to end solutions that are differentiated through their scalability.  “Dell is an end-to-end solutions provider today as we continue to build out our data center, software and services capabilities,” Michael said during the presentation “We have changed the conversation we’re having with our customers. We are a solutions company first, vertically focused, and creating more value for customers with innovative offerings that provide competitive advantage.” The discussion then moved to Dell’s financial assessment where Brian walked the audience through a long-term financial framework.   He stressed the importance of the EUC business which will continue to be a business that delivers good operating margins and strong cash flow.   This cash flow will be used to fund above market growth rates in the Enterprise Solutions, Software and Services businesses which are targeted to generate operating margins of over 10%.   Within the framework of a disciplined capital allocation process, Brian discussed the introduction of a dividend that will be payable to shareholders in fiscal Q3.  Based on Tuesday’s closing share price the dividend of $0.32/share will yield 2.7%.   He emphasized that this reinforces our ability to generate strong cash flow going forward while maintaining key strategic investments.  The session closed with Q&A with both Michael and Brian.

The next speaker on stage was Jeff Clarke, Vice Chairman and President, Global Operations and End User Computing.  Jeff spoke to our ongoing strategy to win within the end user computing space by strengthening our core PC business, providing new value by focusing on areas such as accessories, and expanding into faster growing areas of the market such as desktop virtualization and Window 8 tablet solutions. For the PC market, Jeff discussed our plans to strengthen our cost position while investing in growth markets and delivering premium value products.  Within Accessories and 3rd Party Software, he presented our plan to apply the same principles that made Client Reinvention a success (reduce complexity, establish repeatable processes), while also growing profitability by shifting the overall mix to Accessories.  For tablets, Jeff spoke to our focus on providing commercial customers with a Win 8 tablet alternative that addresses concerns around security and interoperability.  Finally, Jeff spoke to the tremendous opportunity in desktop virtualization via the industry-leading capabilities of Wyse Technology.

John Swainson, President, Software, introduced many tenants of the strategy for the Software group.  John discussed the strength of the existing Dell software assets and the fact that there is good software IP embedded in the Dell hardware solutions.   Dell has a competitive advantage based on strong share positions in EUC and enterprise solutions that give us more touch points with customers to introduce more comprehensive software embedded solutions.   John sees a good opportunity to deliver profitable growth in software, with a focus on the key areas of security, systems management, business intelligence, and applications. 

Steve Shuckenbrock, President Dell Services, then spoke to Dell’s expanded services capabilities and how Dell recently restructured the services business to align with how we are engaging with our customers.  Next, he highlighted the financial successes that the Services business has experienced in recent quarters, including both topline growth and improved profitability.  Of note was the 79% growth in new signings as of the end of Q1 (trailing twelve months), which included a heavy mix of signings from new customers, regions outside of North America, and verticals outside of the core Health Care and Federal space.  Steve then commented on Dell’s overall strategy in the cloud – to develop an enterprise-class cloud portfolio focused on business outcomes - and how Cloud Services supported that strategy.  Finally, Steve closed his presentation with the drivers of Dell Services’ growth through FY16, including areas such as global expansion of our scalable mid-market design, data center enablement, and enhanced security leadership. 

Brad Anderson, President, Enterprise Solutions, spoke about Dell’s opportunity for growth in enterprise, specifically focusing on growth drivers in our server, storage and networking portfolio.  Since FY08, Dell has fundamentally transformed the business as a result of both organic and inorganic investments in enterprise solutions and services, resulting in an end-to-end portfolio that is unencumbered by legacy technologies, designed with simplicity and automation in mind, and doesn’t lock customers into proprietary stacks.  These underlying design principles, combined with Dell’s focus on developing and integrating the most innovative technologies into our enterprise solutions, gives the company confidence it can drive the enterprise solutions business to $15B by FY16.  Dell’s recent announcement introducing the first quarter-height blade, 40GbE blade switch, and enterprise-class blade array, demonstrates Dell’s commitment to innovation and the power of offering a differentiated range of end-to-end solutions to meet our customers’ needs.

To finish the day, Steve Felice, Chief Commercial Officer, was joined by Cheryl Cook, VP of Global Enterprise Solutions, and Kim Hibler, VP and GM, SMB North America and Public & Large Enterprise, Canada.  Steve, Cheryl and Kim emphasized that this is a new Dell and the go-to-market approach is differentiated to match our new and growing solutions offerings.   The focus of the discussion was around key areas of success and strategy in emerging markets, small and medium businesses and Enterprise solutions.   It was emphasized that Dell’s mid-market design point is scalable and addresses the needs of our largest customers in a very effective manner.  

The 2012 Dell Analyst Meeting was a great success and we encourage you to watch the replay of the event If you missed it, here.  We welcome and look forward to your comments.