Dell Turnaround 1st Qtr 2008 Earnings

Dell today reported record fiscal first quarter revenue of $16 billion, a 9 percent year-over-year increase, and earnings of $0.38 cents per share, a 12 percent increase. The results were driven by better-than-industry growth of commercial and consumer products and services, and lower operating expense as a percent of revenue.

Product shipments in the quarter increased 22 percent, with servers growing three times the industry rate at 21 percent. Storage revenue increased 15 percent and enhanced services revenue was up 13 percent. Notebook unit growth, a Dell strategic priority, rose sharply at 43 percent and 1.2 times the industry growth rate. Consumer units grew at more than two times the industry rate and the company increased its global share by 1.2 points to 8.8 percent during the quarter.

“We are executing on all points of our strategy to drive growth in every product category and in every part of the world,” said Michael Dell, chairman and CEO. “These results are early signs of our progress against our five strategic priorities. Through a continued focus, we expect to continue growing faster than the industry and increase our revenue, profitability and cash flow for greater shareholder value.”

Dell’s headcount has been reduced by 7,000 in the past year – including a reduction of about 3,700 in the first quarter – or 8 percent before the impact of acquisitions. Dell has added about 2,700 employees through acquisitions, making the net reduction for the company about 5 percent.
Operating expenses were 12.9 percent of revenue for the quarter. Cash flow from operations was $143 million and impacted by lower payables and tax and bonus payments. The company still expects to generate cash flow from operations in excess of net income on an annualized basis. Dell ended the quarter with $9.8 billion in cash and investments and weighted average shares were 2.04 billion.
In the quarter, Dell issued $1.5 billion in private placement and medium- and long-term notes to be used for general corporate purposes. Dell spent more than $1 billion to repurchase 52 million shares of stock and plans to spend at least $1 billion on share repurchase in the second quarter.

Regional Highlights (This is the key for Dell's long term success (Tim))
Revenue from outside the United States during the quarter surpassed revenue from the U.S. for the first time. BRIC countries – Brazil, Russia, India and China – led accelerated growth in emerging countries with 73 percent year-over-year increase in shipments and 58 percent increase in revenue, and accounted for almost 9 percent of Dell’s total revenue.
Asia-Pacific and Japan Commercial (APJ): Revenue in the quarter grew by 19 percent on a 31 percent increase in units. Operating income was up 52 percent on a balanced country, segment and product performance. India and China led the region with revenue increases of 52 percent and 30 percent, and unit shipment growth of 68 percent and 43 percent, respectively. APJ growth continued strong across all product categories, with shipment increases of 46 percent in notebooks, 23 percent in server shipments and 25 percent in desktops.
Americas Commercial: Total unit growth was up 3 percent driven by an 11 percent increase in notebooks and a 20 percent increase in servers, which was more than four times the rate of the industry.
Europe, Middle East and Africa Commercial (EMEA): Revenue increased 15 percent and shipments were up 30 percent, with a 59 percent increase in shipments of notebooks. Storage revenue increased 48 percent. Unit growth in the region was led by the largest countries: United Kingdom up 20 percent; Germany up 26 percent and France up 14 percent.