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

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Employees

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

Top Executives

Jeffrey W. Clarke, 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

Mark Jarvis, Senior VP/Other Executive Officer
Michael R. Cannon, President, Divisional
Thomas W. Sweet, Vice President, Divisional/Chief Accounting Officer

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

Board of Directors

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

Alex J. Mandl, Director
Klaus S. Luft, Director

Sam Nunn, Director
Lawrence P. Tu, Senior VP/Secretary/General Counsel

Financials

Quarterly
Annual

Income Statement 08/2008 05/2008 02/2008 11/2007
Sales 13.41 Bil. 12.93 Bil. 13 Bil. 12.6 Bil.
Gross Operating Profit 3.02 Bil. 3.15 Bil. 2.99 Bil. 3.04 Bil.
Operating Income before D & A (EBITDA) 2.86 Bil. 3 Bil. 859 Mil. 982 Mil.
Total Income Before Interest Expenses (EBIT) 2.68 Bil. 2.94 Bil. 882 Mil. 936 Mil.
Total Net Income 616 Mil. 784 Mil. 679 Mil. 766 Mil.
Basic EPS, Total 0.31 0.39 0.31 0.34
Diluted EPS, Total 0.31 0.38 0.31 0.34

BALANCE STATEMENT 08/2008 05/2008 02/2008 11/2007
Cash and Equivalents 8.62 Bil. 8.27 Bil. 7.76 Bil. 12.24 Bil.
Total Assets 21.78 Bil. 20.5 Bil. 19.88 Bil. 24.35 Bil.
Total Liabilities 18.19 Bil. 17.37 Bil. 18.53 Bil. 18.05 Bil.
Total Capitalization 4.66 Bil. 5.3 Bil. 4.1 Bil. 7.24 Bil.

Cash Flow 08/2008 05/2008 02/2008 11/2007
Net Cash From Continuing Operations 1.25 Bil. 143 Mil. NA 2.75 Bil.
Net Cash From Investing Activities 579 Mil. -30 Mil. NA -85 Mil.
Net Cash From Financing Activities -987 Mil. 387 Mil. NA -86 Mil.
Net Change in Cash & Cash Equivalents 859 Mil. 509 Mil. NA 2.69 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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