12. Feb 2004

Dell Posts Record Operating Results in Fiscal Fourth Quarter

Dell continued its leading growth in enterprise computing. Shipments of PowerEdge servers jumped 40 percent from the year-ago quarter, more than double the rate for the rest of the industry. Storage revenue was 47 percent higher. And company strength was global: product shipments were up more than 30 percent in Europe, the Middle East and Africa and in Asia-Pacific and Japan, and exceeded 20 percent in the Americas.

Company revenue for the quarter ended Jan. 30 was $11.5 billion, 18 percent higher than a year ago. Net earnings were 29 cents per share, up 26 percent. Full-year sales were $41.4 billion, operating income was $3.5 billion and per-share earnings were $1.01, all Dell records.

”Dell is alone in simultaneously providing customers great value, growing faster than the industry and earning a compelling profit for investors,” said Kevin Rollins, the company's president and chief operating officer. ”Doing that requires a high-quality, low-cost business model and great discipline. We have both.”

”Much of the industry's quarterly growth was at the low ends of the desktop and notebook categories, which offer little if any profitability. Dell met its operating targets by pursuing profitable growth.”

Dell's profitability was up strongly from a year ago, both in absolute terms and as a percent of revenue. Fourth-quarter operating income was $981 million, or 8.5 percent of revenue. Operating expenses were 9.6 percent of revenue, matching a company low and down from 9.9 percent in the year-ago quarter. Below operating income, strong sales and earnings growth in markets outside the United States resulted in a lower effective tax rate.

Industry-leading profits and efficient asset management helped Dell generate $1.1 billion in cash from operations. Total cash and investments at the end of the quarter were $11.9 billion, the highest in company history.

Mr. Rollins said Dell expects first-quarter fiscal-2005 product shipments to rise more than 20 percent, ahead of anticipated industry growth. The resulting company volume should produce quarterly revenue of $11.2 billion, up about 17 percent from the prior year, and earnings per share of 28 cents, up 22 percent.

Servers, Storage Systems Push Regional Strength

With record sales in the fourth quarter, the company reached $8.5 billion in full-year revenue in Europe, the Middle East and Africa (EMEA), 23 percent more than in fiscal 2003. Quarterly company product shipments in the region rose 33 percent, highlighted by increases in the three largest national markets: the United Kingdom, France and Germany. Without Dell, industry volumes were up 20 percent.

Total product shipments in Asia-Pacific and Japan increased 34 percent, those for servers 36 percent. Absent Dell, the regional industry was up just 9 percent overall, 10 percent in servers. In China, already the region's second-largest national market, combined company volumes of servers and notebook computers were 47 percent higher.

Dell product shipments in the Americas rose 22 percent, thanks to solid increases in all customer segments. Total volumes in Canada, Mexico and Brazil were up 25 percent. Growth in systems sold to U.S. consumers was 26 percent, more than twice the average of other companies.

Enterprise Categories Strong, Printers Exceed Expectations

Dell's 40-percent increase in server shipments earned the company nearly two additional points of market share versus a year ago. In the United States, where Dell is the category leader, server volumes were up 49 percent, two-and-a-half times the rate of the rest of the industry. Sales from PowerVault and Dell/EMC external storage systems are now at a $1.8 billion annual run rate.

Revenue from software and peripheral (S&P) products rose 36 percent in the fourth quarter. Dell's own products-including printers and accessories, LCD television/computer monitors, handheld devices and digital projectors-accounted for nearly half of S&P sales.

Since their introduction in March, Dell has sold more than 2 million of its printers. Fourth-quarter volumes were nearly double those for Q3. Customer feedback shows exceptional satisfaction with Dell's unique ink-management process, which alerts users on their computer screens when ink is low, provides a link to purchase replacement cartridges online and ships 99.8 percent of orders the same day.

In January, Dell announced it would expand its imaging line through new technology partnerships with Fuji Xerox Co. Ltd., Eastman Kodak Co. and Samsung Electronics Co. Ltd., and its successful existing relationship with Lexmark International Inc.

Shipments of Inspiron and Latitude notebook computers were up 40 percent, ahead of the rest of the industry. Volumes of Dimension and OptiPlex desktop computers rose 21 percent, compared with an average 8 percent for other companies.

Dell Inc. (NASDAQ: DELL) is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Company revenue for the past year totaled $41.4 billion. Dell, through its direct business model, designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals. Information on Dell and its products can be obtained at www.dell.com.

Special note: Statements in this press release that relate to future results and events (including statements about fiscal first-quarter financial and operating performance) are based on the company's current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including general economic and business conditions; the level of demand for the company's products and services; the level and intensity of competition in the technology industry and the pricing pressures that have resulted; the company's ability to timely and effectively manage periodic product transitions, as well as component availability and cost; the company's ability to develop new products based on new or evolving technology and the market's acceptance of those products; the company's ability to manage its inventory levels to minimize excess inventory, declining inventory values and obsolescence; the product, customer and geographic sales mix of any particular period; the company's ability to effectively manage its operating costs; and the effect of armed hostilities, terrorism or public health issues on the economy generally, on the level of demand for the company's products and services and on the company's ability to manage its supply and delivery logistics in such an environment. Additional discussion of these and other factors affecting the company's business and prospects is contained in the company'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
Tel. +49-6103-766-3271
Fax +49-6103-766-9655

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

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