17. Feb 2006

Dell Delivers Strong Performance with Record Revenue and Earnings for Fourth Quarter

Dell's enterprise business in the quarter - including storage, servers, services and related software and peripherals - increased worldwide by 21 percent year-over-year. Storage revenue was up 41 percent year-over-year. Dell's business outside the U.S. increased in the quarter by 21 percent year-over-year, reflecting Dell's success in growth areas of Europe and Asia Pacific.

Dell's fourth quarter revenue of $15.2 billion was a 13 percent year-over-year increase. Earnings per share was 43 cents, a year-over-year increase of 65 percent and 16 percent on a Non-GAAP basis. Revenue and EPS exceeded expectations. Revenue was up due in part to a stronger than expected impact of the extra week of sales in the quarter. EPS reflected an adjustment to a lower tax rate for the year because of a larger mix of profits from outside the U.S.

Revenue for the fiscal year was $56 billion, a 14 percent increase. EPS for the fiscal year was $1.46, a 24 percent increase. Non-GAAP EPS, which excludes certain charges and an income tax benefit that occurred during fiscal 2006 and an income tax charge in the fourth quarter of fiscal 2005, increased 21 percent to $1.56.

”We drove a better balance across all price points of our products and greater operational efficiencies this quarter, and performed at the high level of execution we expect for ourselves,” said Kevin Rollins, Dell's chief executive officer. ”Our success in countries such as China and Germany shows the Dell direct business model is preferred by customers in all regions and provides us with a unique advantage and opportunity for continued growth.”

Cash flow from operations was $1.6 billion for the quarter and $4.8 billion for the fiscal year. Dell ended the quarter with $11.7 billion in cash and investments. During the quarter, Dell spent $2 billion to repurchase 66 million shares of common stock, reducing weighted average shares outstanding by 7 percent year-over-year. For the full year, Dell spent $7.2 billion to repurchase almost 205 million shares, which was more than four times the number of options that were granted during the year.

The company expects first quarter fiscal year 2007 revenue of $14.2 to $14.6 billion and earnings per share of 39 cents to 41 cents, excluding an estimated three cents of stock compensation. Dell begins reporting earnings including stock compensation expense in the first quarter of fiscal 2007. The company plans to repurchase at least $1.2 billion in stock during the next quarter.

Strong Growth in All Regions of the World

Sales outside the U.S. were an all-time high of 43 percent of the company's overall revenue for the fourth quarter, up from 40 percent in the previous quarter. The company gained share in every region during the year.

Asia Pacific and Japan (APJ) increased revenue in the quarter by 21 percent and units by 27 percent year-over-year. In China, units grew 28 percent year-on-year with strong profitability, demonstrating that the direct model can excel in all regions of the world. Dell has begun shipping product from its second manufacturing facility in Xiamen, China, to meet the growing demand in the region.

Revenue in Europe, Middle East and Africa (EMEA) was up 18 percent year-over-year and Dell increased its share in 16 of 19 direct countries in the region. Shipments increased 25 percent year-over-year, led by an increase of 54 percent in mobility products.

Sales in the Americas were up 10 percent year-over-year, with the countries outside the U.S. increasing revenue 33 percent year-over-year. Corporate revenue in the U.S., including small and medium businesses, was up 12 percent year-over-year as business customers continue to refresh and upgrade their IT infrastructures.

Storage Growth Highlights Product and Service Performance

Dell continued to hold the No. 1 worldwide share position. Dell shipped 37 million units in the year, a 19 percent increase over the previous year, and a record 10.2 million units in the fourth quarter, a 15 percent year-over-year increase.

The transition to mobility products worldwide resulted in revenue increases of 22 percent on shipment increases of 47 percent year-over-year. Dell increased storage revenues 41 percent year-over-year. Shipment of servers increased 11 percent year-over-year, with strong growth in EMEA and APJ. Revenue for enhanced services was up 26 percent.

Revenue for imaging products was up 17 percent year-over-year as Dell moved its focus from single-function inkjets to color laser and all-in-one inkjet printers. Consumable revenue continued to grow and contribute more to overall imaging revenue, driving stronger profitability.

New Products Enhance Customer Experience

Dell announced its first dual-core, widescreen notebook during the quarter, one of three new products that deliver previously unavailable features to enhance customers' experience in high-end gaming and mobile productivity. Dell announced the Inspiron E1705 with Intel CoreTM Duo processors and a 17-inch display, the XPS 600 RenegadeTM desktop gaming system and a 30-inch LCD monitor, all providing extreme performance. Dell XPS desktop and notebook shipments were up 20 percent year-over-year, which helped to drive a richer mix of product sold in the consumer business.

Dell Inc. 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 sells more systems globally every day than any computer company, placing it No. 28 on the Fortune 500. Company revenue for the last four quarters was $56 billion. For more information, visit www.dell.com. To get Dell news direct, visit www.dell.com/RSS.

Special Note

Statements in this press release that relate to future results and events (including statements about Dell's anticipated financial and operating performance) are forward-looking statements based on Dell's current expectations. Actual results in future periods could differ materially from those projected in these forward-looking statements because of a number of risks and uncertainties, including: general economic, business and industry conditions; the level and intensity of competition in the technology industry and the pricing pressures that have resulted; local economic and labor conditions, political instability, unexpected regulatory changes, trade protection measures, tax laws and fluctuations in foreign currency exchange rates; the ability to accurately predict product, customer and geographic sales mix; the ability to timely and effectively manage periodic product transitions; reliance on third-party suppliers for product components, including dependence on several single-source supplier relationships; the ability to effectively manage operating costs; the failure to attract and retain qualified personnel; the level of demand for the products and services Dell offers; the ability to manage inventory levels to minimize excess inventory, declining inventory values and obsolescence; and the effect of armed hostilities, terrorism, natural disasters and public health issues on the economy generally, on the level of demand for Dell's products and services and on Dell's ability to manage its supply and delivery logistics in such an environment. Additional discussion of these and other factors affecting Dell's business and prospects is contained in Dell's periodic filings with the Securities and Exchange Commission.

Consolidated statements of income, financial position and cash flows follow.

For further information:

Dell GmbH
Michael Rufer
Public Relations Manager Dell Germany/Austria
Fax +49-69-34824-3271

Eva Kia-Wernard
Senior Account Manager
Tel. +49-89-59997-802
Fax +49-89-59997-999