12. Aug 2004

Dell Second-Quarter Revenue Up 20 Percent, EPS 29 Percent Higher

Dell revenue was $11.7 billion, a company record and 20 percent higher than in the same quarter a year ago. Sales in Europe, the Middle East and Africa and in Asia-Pacific and Japan rose 30 and 29 percent, respectively. Combined revenue for enterprise systems, including servers and storage systems, accounted for 22 percent of overall sales, matching a company high.

Earnings per share were 31 cents, 29 percent higher and also a Dell record. Results were consistent with revised company guidance in mid-July, which included an increase in earnings expectations.

”We start with the marketplace advantage of a more efficient, more customer-focused way of doing business,” said Kevin Rollins, Dell's chief executive officer. ”And our global team is consistently disciplined in applying that business model.”

”Like our shareholders, our expectation is for volume and share growth along with solid profitability. Those objectives aren't mutually exclusive.”
According to Mr. Rollins, Dell's third-quarter product shipments should be 21 percent higher than in the same year-ago period. Such growth is expected to produce quarterly revenue of about $12.5 billion, up 18 percent, and earnings per share of 33 cents, a 27-percent increase.

In the most-recent quarter, operating expenses were 9.6 percent of revenue, equaling a company low. Operating profit as a percent of revenue was 8.6 percent, up from 8.4 percent in the year's first quarter. Dell generated more than $700 million in cash from operations during the period, at the end of which company cash and investments totaled $11.8 billion.

EMEA Leads Robust Worldwide Volume Gains

Dell's global product shipments increased 19 percent, sharply faster than for the rest of the industry.

Second-quarter shipment growth in Europe, the Middle East and Africa was 30 percent, 12 points higher than the average of other companies in the region. Among Dell highlights: a 44-percent rise - double the rest of the industry - in server shipments, and a 60-percent increase in total storage revenue.

Overall company volumes in the United Kingdom were up 30 percent, twice that of the industry excluding Dell. Server growth of 34 percent in the U.K. enabled Dell to close the gap between itself and the national category leader by more than eight share points from a year ago. Dell France achieved a 38-percent increase in overall shipments, 37 percent in servers.

Company shipment growth of 28 percent in Asia-Pacific and Japan was more than double that of the rest of the industry. Dell server volumes in the region were up 33 percent.

In Japan, Dell's 19-percent shipment increase compared with 1 percent for other suppliers. Dell gained two points of market share from last year's second quarter, as its share exceeded 12 percent for the first time and again ranked No. 3 nationally.

Profitable growth in China during the period included a 41-percent jump in server shipments. Dell was recently recognized for the first time with a ”gold” user-satisfaction award for standards-based server service by the China Center for Information Industry Development.

In the Americas, Dell revenue grew 16 percent. The company added nearly two points to its leading United States market share, with shipments increasing at more than twice the average of other companies. Total demand by large-corporate and small- and medium-business customers increased 21 percent. Americas volumes outside the U.S. rose 25 percent, led by strong growth in Canada.

U.S. consumers purchased 29 percent more Dell notebook computers than in the same period a year ago.

Servers, Printers Highlight Strategic Product Growth

Dell's 31-percent second-quarter increase in server shipments was 12 points higher than average server growth for other companies. The company is introducing a new, eighth-generation of PowerEdge servers, which feature more powerful processors and enhanced systems-management software.

Revenue from software and peripheral products increased 31 percent, helped by sustained strong demand for Dell printers. Those products are being introduced in more countries, including Japan during the second quarter and China in Q3. The company expects to sell five million Dell printers during fiscal 2005, up from an original target of four million. Dell's overall printing and imaging business is now at a $1 billion annual run rate.

In notebook computers, Dell's combined shipments of Inspiron and Latitude systems rose 28 percent, significantly more than the increase for other companies.

Dell Inc. (NASDAQ: DELL) is a trusted and diversified information-technology supplier and partner, and sells a comprehensive portfolio of products and services directly to customers worldwide. Dell designs, builds and delivers innovative, tailored systems that provide customers with exceptional value. Company revenue for the past year was $49.2 billion. For more information about Dell and its products and services, visit www.dell.com.

Statements in this press release that relate to future results and events (including statements about fiscal 2006 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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