Dell Q2 Preliminary Results Released

Dell Q2 Preliminary Results Released


The Official Dell Corporate Blog

Dell Q2 Preliminary Results Released

Folks who read Direct2Dell pretty regularly know I am not an Investor Relations person. That means I will not be commenting on financial results. I just wanted to make this information available to people who are expecting it.



Quarter Highlighted by Improved Growth and Profitability Across All Regions and Strength in Enterprise Products       

ROUND ROCK, Texas, Aug. 30, 2007—Dell today reported preliminary results for its second quarter of fiscal year 2008, with revenue of $14.8 billion, operating income of $896 million and earnings per share of $0.32.  Strength in enterprise products and services, improved average selling prices and favorable component costs drove profitability in the quarter.  Cash and marketable securities were $13.8 billion at the end of the quarter.   

"We continue to invest in company initiatives that align our products and services around customers' needs in order to drive long-term, sustainable performance and extend our position as a trusted technology partner," said Chairman and CEO Michael Dell.  "While our results demonstrate we've made progress against our goals, we are still in the early stages of transforming our company's structure, costs and operations."

Operating Profit Impacted by Higher Expenses

Several factors adversely impacted operating expenses in the quarter, including $102 million, or $0.03 per share, in incremental compensation expense related to payments for expired in-the-money stock options; $59 million, or $0.02 per share, in costs associated with the Audit Committee's investigation into certain accounting and financial reporting matters; and higher headcount and associated costs related to investments in sales and customer support. 

As the company continues to implement its transformation program, the priority is to drive profitable growth while reducing operating expenses as a percentage of revenue.   The company expects to accomplish this by improving front-line productivity, reducing headcount where appropriate and investing in infrastructure and key growth initiatives.  The company is focused on the optimal alignment of resources, coupled with scaling via growth initiatives and cost reduction, and continues to pursue reductions in headcount. 

Transformation Update

Several actions during the second quarter reflected Dell's ongoing strategy to simplify IT for its customers by reducing the cost, time and complexity of managing information technology, including:

  • The launch of the VostroTMbrand of notebook and desktop computers, the first product line designed for the unique needs of small businesses, featuring simple-to-use tools that address problems such as data back-up and PC performance and health, and dedicated customer support. Vostro products do not include "trialware" and feature specialized networking support for customers who don't have dedicated IT staffs.
  • The introduction of our new flagship ultra-portable notebook, the XPSTM M1330, our super thin 13.3-inch notebook, featuring cutting-edge design elements and a durable magnesium alloy chassis with brushed aluminum accents. In addition, new Inspiron notebook systems feature mobile broadband, widescreen displays, built-in webcams and eight color choices.
  • Agreements to acquire ASAP Software, a leading software solutions and licensing services provider; privately-held SilverBack Technologies, Inc., a service delivery platform provider for remote monitoring and management of information technology infrastructure such as servers, storage, networks, desktops and notebooks; and Zing Systems Inc., a consumer technology and services company that focuses on always-connected audio and entertainment devices.
  • Announced plans to reach more customers globally via indirect distribution channels through partnerships with Wal-Mart and Sam's Clubs in North and South America, Bic Camera Inc. of Japan and Carphone Warehouse in the United Kingdom.

Product Performance Driven by Continued Focus on Server and Storage Solutions

Server revenue in the second quarter was $1.6 billion. For Q2, Dell was again No. 1 in the United States in server units shipped with 32.7 percent share.  Storage revenues were $0.6 billion.  During the quarter, Forrester Consulting1 issued a report that demonstrated how Dell's new IT simplification solutions, which include server consolidation and virtualization solutions, increased the ROI benefits for one of Dell's customers.

Dell also announced a partnership with Emerson Network Power and its Liebert power and cooling business to help customers lower their datacenter power and cooling requirements by up to 42 percent and increase systems performance by up to 80 percent compared to prior generations of Dell servers. 

Revenue from mobility products was $3.9 billion while desktop revenue was $5.0 billion.  During the quarter, the company ran a higher-than-normal product backlog, driven by better-than-expected demand for the new Inspiron and XPS color notebooks coupled with supply constraints for several colors, and a tightening in supply of certain flat-panel displays.  The company believes the supply environment will improve in the second half of the year.  Enhanced services revenue was $1.3 billion and software and peripherals revenue was $2.4 billion. 

Company Outlook

The company is focused on IT simplification for its customers, including transforming its business to provide better value to customers while expanding its growth opportunities.  These efforts set the stage for a more sustainable balance of liquidity, profitability and growth.  During this period of transformation, operating results will vary as the company focuses on making investments and realigning the business.  Near-term results could be adversely impacted by a slower decline in component costs in the second half of the year.  The company does not expect to resume its share repurchase program until after it has filed its fiscal year 2007 Form 10-K, which is expected to occur by the first week of November.

Preliminary Results Subject to Change

As previously announced on Aug. 16, 2007, Dell will restate its previously issued financial statements for fiscal 2003, 2004, 2005 and 2006 (including the interim periods within those years), and the first quarter of fiscal 2007.  In addition, the company has not filed its Forms 10-Q for the second and third quarters of fiscal 2007 and the first quarter of fiscal 2008 or its Form 10-K for fiscal 2007.  Consequently, all financial results described in this press release, as well as the previously announced financial results for the second, third and fourth quarters of fiscal 2007 and first quarter of 2008, should be considered preliminary, and are subject to change to reflect any necessary corrections or adjustments, or changes in accounting estimates, that are identified prior to the time the company completes the restatement and these filings.   

NASDAQ Listing Update

            As previously announced, on Aug. 17, 2007, the Board of Directors of The NASDAQ Stock Market issued its decision to give the company until Nov. 12, 2007 to file its past due periodic reports and regain compliance with NASDAQ's listing requirements.  Dell previously announced that it expects to file its past due periodic reports by the first week of November.

Annual Meeting and Analyst Meeting Update

            The company's annual meeting of shareholders is being planned for Dec. 4, 2007.  The company plans to hold a strategy call on Nov. 29, 2007 when it releases fiscal third quarter 2008 earnings.  The company also plans to hold a full analyst meeting on April 2 and 3, 2008, in Round Rock, Texas.

About Dell

Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell is a leading global systems and services company and No. 34 on the Fortune 500. For more information, visit, or to communicate directly with Dell via a variety of online channels, go to To get Dell news direct, visit

1The Total Economic ImpactTM Of Dell's Server Consolidation And Virtualization Solutions Single Company Analysis A Commissioned Study Conducted by Forrester Consulting on Behalf of Dell. The complete report may be accessed at

Special Note

Statements in this press release that relate to future results and events (including statements about our preliminary and expected future financial and operating performance) are forward-looking statements based on our current expectations. Actual results may differ materially from the forward-looking statements because of a number of risks and uncertainties, including: the risk that additional information may arise during the completion of our work on the restatement, our independent auditor's review of the investigation and completion of its audit work, the Audit Committee's final review of the investigation and the restated financial statements, and as a result of other subsequent events; any additional issues or matters arising from the ongoing SEC investigation; our ability to successfully remediate identified internal control deficiencies; our ability to meet NASDAQ requirements for continued listing as a result of our past due periodic report filings; general economic, business and industry conditions; our ability to maintain a cost advantage over our competitors; local economic and labor conditions, political instability, unexpected regulatory changes, trade protection measures, tax laws, copyright levies and fluctuations in foreign currency exchange rates; our ability to accurately predict product, customer and geographic sales mix and seasonal sales trends; information technology and manufacturing infrastructure failures; our ability to effectively manage periodic product transitions; our reliance on third-party suppliers for quality product components, including reliance on several single-source or limited-source suppliers; our ability to access the capital markets; litigation and governmental investigations or proceedings arising out of or related to accounting and financial reporting matters; our acquisition of other companies; our ability to properly manage the distribution of our products and services; effective hedging of our exposure to fluctuations in foreign currency exchange rates and interest rates; 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. Additional discussion of factors affecting Dell's business and prospects is contained in Dell's periodic filings with the Securities and Exchange Commission.


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  • Dell Customer UK: I'm sorry for missing your e-mail that you sent to me directly. If you will please re-send it, I will be happy to follow up with you.

    My apologies.

  • Lionel you disappoint me, really you do.!!! Who wants to read about dells Q2 results here , when messages after messages on this blog are saying “ DUDE WHERE IS MY LAPTOP”, I’ve sent you a person e-mail which you kindly  ignored and so please spare us the PR stunt and give us more information on our  over delayed laptop orders. You really antagonize me with this silly entry ,we the customers demand assurances and information with our laptop orders , I don’t have confidence to buy a laptop from dell never mind invest in this so called blue chip company . here is a tip sir ,Q3 will be the worst in dell history with the way things are going.


    3 months to build a laptop , thank god dell are not running our  essential  service or we all would have gone back to the stone ages

  • This is fantastic news, i knew Dell would turn around and once again aim for the top. )

    It is just a matter of time now before HP starts sweating as Dell passes them (again)

  • Thank you for blogging about all aspects of Dell. This blog is a must read for All Things Dell.
  • Ok, now that Jason and HC, the local day trading Dell investors have had their mandatory about answering Justin?

    I realize that this is a Dell blog and that you have a keen desitre to share some good news but that certainly doesn't mean that you should continue the non-communication that you are becoming known for on this blog.

    ANYTHING that detracts from the problems at hand should be discarded. This news that Dell pulled down a billion bucks is gasoline on the fire...our money, no products...what a business plan.

    This is becoming a joke 

  • Great news. Glad to hear Dell is making money hand over fist.

     Now...where's my laptop I ordered over 6 weeks ago?

  • How do we know these numbers aren't fudged like your past financial reports?  Your doctored financial reports are about as reliable and accurate as your estimated ship dates.
  • Sadly for Dell, I think "Dell customer uk" may be right about Dell's Q3.  I was considering buying an M1330 but was and still am scared away by the shipment delays.  Now, Sony and Toshiba both have competitive products on the market, and I can only imagine it will be a matter of time before other companies also introduce more competitive products.

    So thanks to Dell's blunder, I'm waiting and making do with what I have.  Personally, with the way the markets are behaving, I'm glad that I put off such a large purchase.  Barring some freak inflation scenario, over time today's technology will only get cheaper, and new technology will arrive at today's price.  Maybe by the time I am no longer spooked about buying a $3500+ tool/toy, SSDs will be commonplace and less expensive, and we will have a clear DVD-HD winner.

    Also, from my experience Dell's website and websales integration is a nightmare.  They send me marketing which has invalid links, and sporadically I find different prices on the same product through different links.  They don't seem to be doing anything about this; in fact, the problem seems to be getting worse, or at least I am observing it more frequently based on marketing I receive.

    The only thing I still love about Dell is their warranty service, which in and of itself is kind of sad (i.e. because Dell's laptop parts have proven so unreliable, I have had a lot of experience with Dell's support).  Their support is great, I just wish I didn't have to contact them so often.

    If Dell wants to be successful in today's environment, they only need to understand two words: instant gratification (for the customer, not Dell).

  • Yet nothing is mentioned about the "wonderful" customer service issues that those that buy laptops are experiencing!  May I mention the fact that my laptop was supposed to be shipped today and today at 5:34 CST, I recieved an e-mail stating that it would not be shipped for 35 more days and you are telling me that those assembling it did not know this information until now?

    Yes, things may seem good now but the bad press may soon overtake the good and this is coming from someone who has always enjoyed great service from Dell and it's products up until this point!

  • >> we the customers demand assurances and information with our laptop orders <<

    Oh please. We the customers haven't ALL ordered laptops, and many of us do care about the company's quarterly results. Thanks for taking the time to post this, Lionel.

  • Dell Customer UK, you do realise this is Dell's Corporate Blog, not Dell's Complaints Blog, right?  As far as I'm concerned they have a duty to blog on a wide range of issues, not just on XPS issues, or notebook supply issues.  There are already a large number of entries regarding those issues - perhaps your comment would be better suited to those entries, not a completely unrelated topic.
  • Anyone else think the reason their quarterly earnings are so high is because they have all our money and they're not shipping or manufacturing any product???
  • WOW!  The legal disclaimer is almost as long as the article.  It is good news to see Dell make some progress in the small business area and IT, but when will the turnaround happen for the home computers and Latitudes?  A video of the upcoming Dell tablet was posted here on May 18th and no further info has come out.  Looked like a working unit in the video so why no product yet?

    IdeaStorm is producing great ideas and feedback for Dell and goes largely ignored except for the moderators and select employees like Lionell who try to find time to post there.  We are discussing having a memorial page added to the site for the users who have become frustrated and given up on the site.  We are still waiting to see who won the green idea contest even though we were promised an answer in July.  No real news has been released on IdeaStorm in almost a month, the Moderator Update section hasn't been updated since May 14th.  I know you and the IdeaStorm moderators are trying but Dell needs to back you up with more support people so you can run these sites the way they should be run.  Dell claims they are trying to open up the communication with the customers but then does little to follow through.  They assign part time help to the sites and keep them busy on other projects.  They refuse to participate by posting on the sites (I think out of fear) which just angers the customers who are trying to help Dell evolve.  Can you please send a wake up call to the executives, not so they can make thier next tee time but to get back to work on the issues being pointed out to them. 


  • Yep we sure are cookin now!! If I get that email like JENNIFER today after waiting since 7/8/07 for my laptop you can bet its going to be time to go shoppin....I AM NOT WAITING ANOTHER MONTH OR EVEN WEEK!!  GOOD BYE....I am sure someone will like my 1700+ dollars.
  • My thanks to jervis961 for representing IdeaStorm participants! So, Lionel joins us?

     Do you??? Sorry that I haven't noticed this!

    But I also agree with others that it's good you posted this information about Dell's progress.

     And, after working with the Dell PowerEdge 2650 'server from hell' the past week (no problem with Dell support STAFF or efforts, note!), I must wonder why some of the 'reliability' suggestions of mine and others haven't shown ANY sign of Dell recognition!

    No, they haven't received many votes, but none of the support suggestions have. I don't think that means they aren't worthy, it only reflects on the profile of the participants AT IdeaStorm.

  • Lowering headcount? you mean firing people.... kinda laughable that you refer to it in such a kind manner, as if its not a big deal.

     as for the laptop dealies, customer service was very helpful for me. i spoke with them about my laptop order(which was still inside of the original build time), and they were happy to give me a free upgrade to next day shipping without my even asking. i think this drama about bad customer service and rediculous shipping times is WAY overblown. have some patience people... the issues are being experienced everywhere.

  • Lionel Menchaca didn't respond to my email either. Maybe because he's getting so many, I don't know.
  • How can the XPS m1330 be in the 2Q report when dell didn't deliver them until the 3Q?

    Also, someone said that customers want instant gratification. That is true but they are willing to wait the 2-weeks that Dell usually takes to get a computer to them because they get exactly the computer they want for less money then most retail.
  • I have a good idea, how about posting your notebook delay complaints in the notebook delay blog section. This is for Dell enthuasists who have ties with Dell's investments, which by the way is starting to pay off big time. And I only see it going up from here. And in case your wondering, yes i did also purchase a notebook during the delay time, Inspiron 1520 Ruby Red, took 25 days, but it was well worth the wait and i gave Dell a break because at least their honest enough to admit what's going on.




  • Justin,

     As we are talking about investments, we should talk about depreciation. Depreciation happens when people get a laptop 100 days after ordering the laptop.

     People who ordered on a debit card have the most reason to complain -- the money is out of their accounts. People with credit card orders should just cancel them and move on.

     Lenovo has dropped the price of the T61p -- the all-black gaming laptop -- to just $1500. It has a faster graphics card then the GeForce 8700M GT, the Quatro 570m. Lenovo claims a 2 week lead time on the T61p, while it still looks like Dell is telling people 4 weeks.

     I bet we will see a poor 3rd quarter for Dell. Are the in-China suppliers going to get the inside track on when supplies get tight?

    Looks that way from outside the industry...
  • Great for Dell. Your quarter profits are not helping me any. I'm so glad that the nice reporter from USA Today took the time to talk with me yesterday. She also posted about your profits, AND unhappy customers. Oh and I did as I said I would in my post the other day. I took the money I was spending on a Dell and bought a super HP Pavilion tonight. I'm happy to know that my money will not help your next quarter profits!
  • "i think this drama about bad customer service and rediculous shipping times is WAY overblown. have some patience people"

    You obviously have not been waiting long. 

  • The M1330 is not the thinnest notebook in the world. The MacBook is 2.75 cm while the M1330 is 3.38 cm.

    I would not be surprised if they also had other inaccurate information on their PR.
  • I'm tired of the comment "dude, where is my car errr my 1330?", they're already aware of the issue and spam that comment on EVERY posts doesn't make it any faster to delivery. Anyway back to topic

    the Q2 results looks impressive but a bit late IMO, Dell is fighting back hard :D and I like Dell's innovative effort so far (1330, the multi colors notebook, etc).

    I want to buy a m1330 for this Xmas season so I don't want Dell to rush and product incompetent product. just take your time, I can wait np. ^^

  • >> How can the XPS m1330 be in the 2Q report when dell didn't deliver them until the 3Q? <<

    Dell's fiscal year starts in February, so Q2 is May/June/July.