Dell Reports Strong Second Quarter Financial Results Driven by

Dell Reports Strong Second Quarter Financial Results Driven by Enterprise Solutions and Services

Consolidated statements of income, financial position and cash flows and other financial data follow.

Dell, EqualLogic and Compellent are trademarks of Dell Inc. Dell disclaims any proprietary interest in the marks and names of others.


DELL INC.
Condensed Consolidated Statement of Income and Related Financial Highlights
(in millions, except per share data and percentages)
(unaudited)

	Three Months Ended									% Growth Rates
	July 29,			April 29,			July 30,
		2011			2011			2010		Sequential		Yr. to Yr.

Net revenue
Products	$	12,610		$	12,059		$	12,645		5	%	(0	%)
Services, including software related		3,048			2,958			2,889		3	%	6	%
Net revenue		15,658			15,017			15,534		4	%	1	%

Cost of net revenue
Products		9,935			9,436			10,931		5	%	(9	%)
Services, including software related		2,198			2,149			2,017		2	%	9	%
Total cost of net revenue		12,133			11,585			12,948		5	%	(6	%)

Gross margin		3,525			3,432			2,586		3	%	36	%

Selling, general and administrative		2,174			2,025			1,679		7	%	29	%
Research, development and engineering		205			195			162		5	%	27	%
Total operating expenses		2,379			2,220			1,841		7	%	29	%

Operating income		1,146			1,212			745		(5	%)	54	%

Interest and other, net		(55	)		(42	)		(49	)	(29	%)	(12	%)
Income before income taxes		1,091			1,170			696		(7	%)	57	%
Income tax provision		201			225			151		(11	%)	33	%
Net income	$	890		$	945		$	545		(6	%)	63	%

Earnings per share:
Basic	$	0.48		$	0.50		$	0.28		(4	%)	71	%
Diluted	$	0.48		$	0.49		$	0.28		(2	%)	71	%

Weighted average shares outstanding:
Basic		1,858			1,908			1,952		(3	%)	(5	%)
Diluted		1,871			1,923			1,960		(3	%)	(5	%)

Percentage of Total Net Revenue:
Gross margin		22.5	%		22.9	%		16.6	%
Selling, general and administrative		13.9	%		13.5	%		10.8	%
Research and development		1.3	%		1.3	%		1.0	%
Operating expenses		15.2	%		14.8	%		11.8	%
Operating income		7.3	%		8.1	%		4.8	%
Income before income taxes		7.0	%		7.8	%		4.5	%
Net income		5.7	%		6.3	%		3.5	%
Income tax rate		18.4	%		19.2	%		21.7	%

Net Revenue by Product Category:
Servers and Networking	$	2,054		$	1,973		$	1,890		4	%	9	%
Storage		502			481			624		4	%	(20	%)
Services		2,036			1,984			1,915		3	%	6	%
Software and Peripherals		2,569			2,567			2,535		0	%	1	%
Mobility		4,761			4,716			4,700		1	%	1	%
Desktop PCs		3,736			3,296			3,870		13	%	(3	%)
Consolidated net revenue	$	15,658		$	15,017		$	15,534		4	%	1	%

Percentage of Total Net Revenue:
Servers and Networking		13	%		13	%		12	%
Storage		3	%		3	%		4	%
Services		13	%		13	%		12	%
Software and Peripherals		16	%		17	%		17	%
Mobility		31	%		32	%		30	%
Desktop PCs		24	%		22	%		25	%

Net Revenue by Global Segment:
Large Enterprise	$	4,584		$	4,477		$	4,549		2	%	1	%
Public		4,457			3,767			4,580		18	%	(3	%)
Small and Medium Business		3,709			3,768			3,535		(2	%)	5	%
Consumer		2,908			3,005			2,870		(3	%)	1	%
Consolidated net revenue	$	15,658		$	15,017		$	15,534		4	%	1	%

Percentage of Total Net Revenue:
Large Enterprise		29	%		30	%		29	%
Public		28	%		25	%		30	%
Small and Medium Business		24	%		25	%		23	%
Consumer		19	%		20	%		18	%

Consolidated Operating Income:
Large Enterprise	$	448		$	504		$	288
Public		484			370			369
Small and Medium Business		404			463			323
Consumer		73			136			(21	)
Segment operating income		1,409			1,473			959
Severance and facility actions		-			(19	)		(24	)
Broad based long-term incentives		(81	)		(97	)		(87	)
Amortization of intangible assets		(95	)		(92	)		(87	)
Acquisition-related		(87	)		(53	)		(16	)
Other		-			-			-
Consolidated operating income	$	1,146		$	1,212		$	745


Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.

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