Dell 1999 Annual Report Download - page 9

Government Regulation
The Company's business is subject to regulation by various federal and state governmental agencies. Such regulation includes the
radio frequency emission regulatory activities of the U.S. Federal Communications Commission, the anti-trust regulatory activities of
the U.S. Federal Trade Commission and Department of Justice, the import/ export regulatory activities of the U.S. Department of
Commerce and the product safety regulatory activities of the U.S. Consumer Products Safety Commission.
The Company also is required to obtain regulatory approvals in other countries prior to the sale or shipment of products. In certain
jurisdictions, such requirements are more stringent than in the U.S. Many developing nations are just beginning to establish safety,
environmental and other regulatory requirements, which may vary greatly from U.S. requirements.
Backlog
At the end of fiscal year 2000, backlog was $310 million, compared with backlog of $170 million at the end of fiscal year 1999, and
backlog of $215 million at the end of fiscal year 1998. The Company does not believe that backlog is a meaningful indicator of sales
that can be expected for any period, and there can be no assurance that the backlog at any point in time will translate into sales in any
subsequent period.
Factors Affecting the Company's Business and Prospects
There are many factors that affect the Company's business and the results of its operations, some of which are beyond the control of
the Company. The following is a description of some of the important factors that may cause the actual results of the Company's
operations in future periods to differ materially from those currently expected or desired.
General economic and industry conditions
Any general economic, business or industry conditions that cause customers or potential customers to reduce or delay their
investments in computer systems could have a negative effect on the Company's strength and profitability. For example, a softening of
demand for computer systems may result in decreased revenues (or at least declining revenue growth rates) for computer
manufacturers in general and the Company in particular and may result in pricing pressures for products that the Company sells,
which could have a negative effect on the Company's revenues and profitability.
Competition
The technology industry is highly competitive. The intense competition inherent in the industry could result in the loss of customers or
pricing pressures, which would negatively affect the Company's results of operations.
International activities
The Company's future growth rates and success are in-part dependent on continued growth and success in international markets. As is
the case with most international operations, the success and profitability of the Company's international operations are subject to
numerous risks and uncertainties, including local economic and labor conditions, political instability, tax laws (including U.S. taxes on
foreign operations) and foreign currency exchange rates.
Product, customer and geographic mix
The profit margins realized by the Company vary somewhat among its products, its customer business units and its geographic
markets. Consequently, the overall profitability of the Company's
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operations in any given period is partially dependent on the product, customer and geographic mix reflected in that period's revenues.
Seasonal trends
The Company experiences some seasonal trends in the sale of its products. For example, sales to governments (particularly
U.S. federal sales) are often stronger in the Company's third quarter, European sales are often weaker in the third quarter and
consumer sales are often stronger in the fourth quarter. Historically, the net result of seasonal trends has not been material relative to
the Company's overall results of operations, but many of the factors that create and affect seasonal trends are beyond the Company's
control.
Technological changes and product transitions
The technology industry is characterized by continuing improvements in technology, which result in the frequent introduction of new
products, short product life cycles and continual improvement in product price/performance characteristics. While the Company
believes that its direct model and asset management practices afford it an inherent competitive advantage over some of its competitors,
product transitions present some of the greatest executional challenges and risks for any computer systems company. A failure on the
part of the Company to effectively manage a product transition will directly affect the demand for the Company's products and the
profitability of the Company's operations. In addition, while the Company has meaningful relationships with some of the world's most