Dell, Incorporated (DELL)

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Michael S. Dell , Founder/CEO/Chairman of the Board/Director
Industry: Technology
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Company Information

Michael S. Dell, Founder/CEO/Chairman of the Board/Director

One Dell Way

Round Rock, TX 78682

US Map it

Phone: (512) 338-4400

Fax: (512) 283-6161

www.dell.com

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Dell

WHERE THEY CAME FROM
Michael Dell was that kid who took electronic devices apart and put them back together. When he turned his attention to computers in the mid-1980s, he came up with a design for a P.C. and decided to sell it directly to customers by mail order. The strategy worked, and thus he became yet another college-dropout billionaire. The company was incorporated in 1984, and in 1988 it had an I.P.O. worth $30 million—which is peanuts today but was enough to launch Dell on an international scale.

WHAT THEY DO
Dell does more than just sell computers. It also makes servers, network switches, networking products, printers, handheld devices, and other gadgets, as well as offer business and support services. But selling desktop computers directly to consumers has always been its bread and butter, which is why it’s scary for the company that this approach has recently yielded disappointing results.

WHAT THEY GOT RIGHT
Dell's success didn’t happen overnight. It took more than 15 years, but the company became the No. 1 seller of personal computers in 2001 and remained the leader until the beginning of 2007. Dell's approach wasn't just about the machines but about the way they were sold. Customers bought into the whole direct-selling approach, and Dell became a respected brand: In 2005, Fortune named Dell its most admired company. In 2003, Dell opened up an online storefront selling MP3 players, handhelds, an L.C.D. TV, and other non-P.C. devices.

WHAT THEY GOT WRONG
Lately, Dell has faced difficulties, including a huge recall in 2006 involving 4.1 million computers after faulty batteries caused some laptops to catch fire. While the computer market is expanding—especially the laptop market—Dell's market share is shrinking, so much so that Hewlett-Packard overtook Dell as the No. 1 personal-computer seller as of the fourth-quarter of 2006.

Dell's 2006 fourth-quarter earnings marked a turning point for the company in other ways as well. Its net income fell by a third, marking the first time revenue had dropped since 2001. And most troubling for the company, Dell's operating margins eroded dramatically, suggesting that its model of removing the middleman and selling directly to consumers is no longer working as well.

The company faces other long-term troubles, including an ongoing Securities and Exchange Commission investigation into the company's accounting practices. And the computer maker can't seem to get its management structure straight: Michael Dell stepped down as C.E.O. in 2004 and was replaced by Kevin Rollins, who stayed until the end of January 2007. Then Dell returned just in time to oversee the release of the company's dire earnings report in March 2007.

WHAT'S NEXT
Dell wants to regain its No. 1 spot, so it's taking its computers back to the people—the people of China, that is. In China's fast-growing P.C. market, Dell’s sales have increased, and in March 2007 the company announced that it will release a low-cost P.C. for the Asian market, its fastest-growing sector. Dell is particularly bullish on India, where its sales more than doubled in the past year and should approach $1 billion for 2007. That still doesn’t solve Dell's laptop crisis in the West, but at least it will help keep the company afloat while it rethinks its products and marketing. -Beth Pinsker

Portfolio Articles
  • Can Dell Save Dell?
    Slowing sales, design glitches, a rocky start at retail. Founder Michael Dell faces problems he never had to
    address during his first stint running the company.
    Jun 16 2008
  • One Word for Michael Dell
    Computer maker turns to The Graduate for guidance: "There's a great future in plastics."
    May 19 2008
  • Life with Laptop
    It's your constant travel companion, a source of pain and pleasure. Here's how to make living with your portable computer easier on both of you.
    May 13 2008
  • Replacement Value
    Tech strategist Arnie Berman tells Duff McDonald how corner-office carnage can lead to big tech stock gains.
    Feb 26 2008
  • One Billion Laptops
    What began as a do-gooder effort in the Third World has quietly become cutthroat competition. Now one firm, Intel, has broken ranks with other behemoths trying to develop technology that is both affordable to buy and build.
    Jan 04 2008

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Employees

Number of Employees: 88,200
Revenue per Employee: $658,718

Top Executives

Jeffrey W. Clarke, Divisional Senior VP
John S. Hamlin, Divisional Senior VP
Andrew C. Esparza, Senior VP, Divisional

Bradley R. Anderson, Divisional Senior VP
Stephen F. Schuckenbrock, Chief Information Officer/President, Divisional/Senior VP
Joan S. Hooper, Divisional Vice President/Chief Accounting Officer

Lawrence P. Tu, Senior VP/Secretary/General Counsel
Stephen J. Felice, President, Geographical/Senior VP
Ronald G. Garriques, President, Divisional

Brian T. Gladden, Senior VP/CFO
Joseph A. Marengi, Geographical Senior VP
Mark Jarvis, Senior VP/Other Executive Officer

Michael R. Cannon, President, Divisional
Thomas W. Sweet, Vice President, Divisional/Chief Accounting Officer
John K. Medica, Divisional Senior VP

David A. Marmonti, President, Geographical/Senior VP
Paul D. Bell, Senior VP/President, Geographical

Board of Directors

Alan G. Lafley, Director
Donald J. Carty, Director
Michael A. Miles, Director

Thomas W. Luce III, Director
Alex J. Mandl, Director
Klaus S. Luft, Director

Sam Nunn, Director

Financials

Quarterly
Annual

Income Statement 05/2008 02/2008 11/2007 08/2007
Sales 12.93 Bil. 13 Bil. 12.6 Bil. 11.69 Bil.
Gross Operating Profit 3.15 Bil. 2.99 Bil. 3.04 Bil. 3.09 Bil.
Operating Income before D & A (EBITDA) 3 Bil. 859 Mil. 982 Mil. 1.04 Bil.
Total Income Before Interest Expenses (EBIT) 2.94 Bil. 882 Mil. 936 Mil. 998 Mil.
Total Net Income 784 Mil. 679 Mil. 766 Mil. 746 Mil.
Basic EPS, Total 0.39 0.31 0.34 0.33
Diluted EPS, Total 0.38 0.31 0.34 0.33

BALANCE STATEMENT 05/2008 02/2008 11/2007 08/2007
Cash and Equivalents 8.27 Bil. 7.76 Bil. 12.24 Bil. 11.2 Bil.
Total Assets 20.5 Bil. 19.88 Bil. 24.35 Bil. 22.21 Bil.
Total Liabilities 17.37 Bil. 18.53 Bil. 18.05 Bil. 17.07 Bil.
Total Capitalization 5.3 Bil. 4.1 Bil. 7.24 Bil. 6.31 Bil.

Cash Flow 05/2008 02/2008 11/2007 08/2007
Net Cash From Continuing Operations 143 Mil. NA 2.75 Bil. 1.75 Bil.
Net Cash From Investing Activities -30 Mil. NA -85 Mil. -121 Mil.
Net Cash From Financing Activities 387 Mil. NA -86 Mil. -16 Mil.
Net Change in Cash & Cash Equivalents 509 Mil. NA 2.69 Bil. 1.66 Bil.

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Income Statement 2008 2007 2006 2005
Sales 49.46 Bil. 47.43 Bil. 45.56 Bil. 39.86 Bil.
Gross Operating Profit 11.67 Bil. 9.99 Bil. 10.34 Bil. 9.35 Bil.
Operating Income before D & A (EBITDA) 3.52 Bil. 3.54 Bil. 4.74 Bil. 4.59 Bil.
Total Income Before Interest Expenses (EBIT) 3.83 Bil. 3.39 Bil. 4.57 Bil. 4.44 Bil.
Total Net Income 2.95 Bil. 2.58 Bil. 3.57 Bil. 3.04 Bil.
Basic EPS, Total 1.33 1.15 1.49 1.21
Diluted EPS, Total 1.31 1.14 1.46 1.18

BALANCE STATEMENT 2008 2007 2006 2005
Cash and Equivalents 7.76 Bil. 9.55 Bil. 7.04 Bil. 4.75 Bil.
Total Assets 19.88 Bil. 19.94 Bil. 17.71 Bil. 16.9 Bil.
Total Liabilities 18.53 Bil. 17.79 Bil. 15.93 Bil. 14.14 Bil.
Total Capitalization 4.1 Bil. 4.9 Bil. 4.63 Bil. 6.99 Bil.

Cash Flow 2008 2007 2006 2005
Net Cash From Continuing Operations NA 3.97 Bil. 4.84 Bil. 5.31 Bil.
Net Cash From Investing Activities NA 1 Bil. 3.88 Bil. -2.32 Bil.
Net Cash From Financing Activities NA -2.55 Bil. -6.23 Bil. -3.13 Bil.
Net Change in Cash & Cash Equivalents NA 2.49 Bil. 2.3 Bil. 430 Mil.

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