Dell 2008 Annual Report Download - page 26

Table of Contents
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Enterprise — In the enterprise, our solution mission is to help companies of all sizes simplify their IT environments. The complete solution
includes servers, storage, services, and software. At the core of this simplification is the problem with complexity in IT architecture and operations
developed over decades and ineffective services models that create unnecessary complexity and cost. We are focused on helping customers identify
and remove this unnecessary cost and complexity. This year we have strengthened our storage portfolio with expanded EqualLogic solutions, new
PowerVault storage products, and fourth generation Dell ï EMC storage systems. We also invested in power and cooling solutions for our data
center platforms, including blade servers, and as a result we have become the industry leader in server virtualization, power, and cooling
performance.
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Notebooks — Our goal is to reclaim notebook leadership by creating the best products while shortening our development cycle and being the most
innovative developer of notebooks. To help meet this goal, we have separated our consumer and commercial design functions to drive greater
focus on our product development process. According to IDC data, the sale of notebook units globally outpaced that of desktops for the first time
during the third quarter of calendar 2008; this trend is expected to continue into the future. In the third quarter of Fiscal 2009, we introduced a new
addition to our Dell Inspiron products with our new 3G enabled Inspiron Mini. In the fourth quarter of Fiscal 2009, we launched our new Studio
XPS 13, Studio XPS 16, and Inspiron 15 notebooks for consumers, and we introduced our Latitude XT2 convertible tablet for our commercial
customers. This year, we also had the largest global product launch in our company's history with our new E-Series commercial Latitude and Dell
Precision notebooks. We expect to continue to launch a number of new notebook products throughout Fiscal 2010, targeting various price and
performance bands.
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Small and Medium Business — We are focused on providing small and medium businesses with the simplest and most complete IT solution,
customized for their needs, by extending our channel direct program (PartnerDirect) and expanding our offerings to mid-sized businesses. We are
committed to improving our storage products and services as evidenced by our new building IT-as-a-Service solution, which provides businesses
with remote and lifecycle management, e-mail backup, and software license management.
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Emerging countries — We are focused on and investing resources in emerging countries with an emphasis on Brazil, Russia, India, and China
("BRIC"), where we expect significant growth to occur over the next several years. We are also creating customized products and services to meet
the preferences and demands of individual countries and various regions, including the new Vostro A notebooks and desktops designed specifically
for cost sensitive growing businesses in emerging economies.
We continue to invest in initiatives that will align our new and existing products around customers' needs in order to drive long-term, sustainable
growth, profitability, and cash flow. We also continue to grow our business organically and through acquisitions. During Fiscal 2009, we acquired
three companies, with the largest being MessageOne, Inc. These acquisitions are targeted to further expand our service capabilities. We expect to
make more acquisitions in the future.
Result of Operations
Consolidated Operations
The following table summarizes our consolidated results of operations for each of the past three fiscal years:
Fiscal Year Ended
January 30, 2009 February 1, 2008 February 2, 2007
% of % of % of
Dollars Revenue % Change Dollars Revenue % Change Dollars Revenue
(in millions, except per share amounts and percentages)
Net revenue $ 61,101 100.0% (0%) $ 61,133 100.0% 6% $ 57,420 100.0%
Gross margin $ 10,957 17.9% (6%) $ 11,671 19.1% 23% $ 9,516 16.6%
Operating expenses $ 7,767 12.7% (6%) $ 8,231 13.5% 28% $ 6,446 11.2%
Operating income $ 3,190 5.2% (7%) $ 3,440 5.6% 12% $ 3,070 5.4%
Income tax provision $ 846 1.4% (4%) $ 880 1.4% 16% $ 762 1.3%
Net income $ 2,478 4.1% (16%) $ 2,947 4.8% 14% $ 2,583 4.5%
Earnings per share — diluted $ 1.25 N/A (5%) $ 1.31 N/A 15% $ 1.14 N/A
Share Position — We shipped 43 million units in Fiscal 2009. According to IDC, in calendar year 2008, we maintained our second place position in
the worldwide computer systems market with a share position of 15.1%. We gained share, both in the U.S. and internationally, as our worldwide
growth of 11.1% for calendar 2008 exceeded the overall worldwide computer systems growth of 9.7%. Our gain in share was driven by a strong
overall performance in the first half of Fiscal 2009 followed by a decline in unit shipments in our commercial business in the second half of the year,
which was partially offset by strength in our global consumer business. Our commercial business's
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