Dell FY 2011 Analyst Day Presentation
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Transcript of Dell FY 2011 Analyst Day Presentation
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2011 Dell Analyst Meeting
June 29, 2011
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Welcome
Rob WilliamsVice President, Investor Relations
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Special Note on Forward Looking Statements:Statements in this presentation that relate to future results and events (including statements about Dells future financial and operaoperating strategies, strategic investments, sales volumes, stock repurchases, pricing, and product mix, as well as the financial guidrevenue and non-GAAP operating income) are forward-looking statements and are based on Dell's current expectations. In some cthese statements by such forward-looking words as anticipate, believe, could, estimate, expect, intend, confidence, may
should, will and would, or similar expressions. Actual results and events in future periods may differ materially from those exprforward-looking statements because of a number of risks, uncertainties and other factors, including: intense competition; Dells coDells ability to effectively manage the growth of its distribution capabilities and add to its product and services offerings; Dells abilperiodic product and services transitions; weak global economic conditions and instability in financial markets; Dells ability to geneU.S. net revenue; weak economic conditions and additional regulation affecting Dells financial services activities; Dells ability to afrom its vendors; Dells ability to deliver consistent quality products and services; Dells reliance on third-party suppliers for producreliance on several single-sourced or limited-sourced suppliers; successful implementation of Dells acquisition strategy; Dells progeographic sales mix, and seasonal sales trends; access to the capital markets by Dell or its customers; loss of government contrasuspension or debarment from contracting with U.S. federal, state and local governments as a result of settlements of an SEC invesDells Chairman and CEO; customer terminations of or pricing changes in services contracts, or Dells failure to perform as it anticiinto services contracts; Dells ability to obtain licenses to intellectual property developed by others on commercially reasonable aninformation technology and manufacturing infrastructure disruptions or breaches of data security; Dells ability to hedge effectivelyfluctuations in foreign currency exchange rates and interest rates; counterparty default; unfavorable results of legal proceedings; e
or favorable tax rate structures, or unfavorable outcomes in tax audits and other compliance matters; Dells ability to attract, retainpersonnel; Dells ability to maintain strong internal controls; changing environmental and safety laws; the effect of armed hostilitiedisasters, and public health issues; and other risks and uncertainties discussed in Dells filings with the Securities and Exchange ComAnnual Report on Form 10-K for its fiscal year ended Jan. 28, 2011. In particular, Dells expectations with regard to revenue and nonincome for the full fiscal year ending Feb. 3, 2012 assume, among other matters, that there is no significant decline in economic codemand growth specifically, no significant change in product mix patterns, Dells ability to realize its pipeline opportunities, no supno significant adverse component pricing or supply movements. Dell assumes no obligation to update its forward-looking stateme
Forward-looking statements
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Non-GAAP Financial MeasuresThis presentation includes information about non-GAAP operating income (the non-GAAP financial measure), which is not a mea
performance prepared in accordance with U.S. generally accepted accounting principles. We have provided a reconciliation of the
financial measure to the most directly comparable GAAP measure in the slides captioned Supplemental Non-GAAP Measures. No
income growth as projected for Fiscal 2012, which is a forward looking non-GAAP financial measure, excludes the following itemscannot forecast with certainty or accuracy due to their inherently indefinite and contingent nature, thereby preventing Dell from r
to GAAP: acquisition related charges, amortization of purchased intangible assets related to acquisitions, and severance and facility
discussion of our reasons for including the non-GAAP financial measures and the limitations associated with those measures is pre
Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Non-GAAP Financial Measures
on Form 10-K for the financial year ended January 28, 2011. We encourage investors to review the historical reconciliation and the
conjunction with our presentation of the non-GAAP financial measures.
Forward-looking statements
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AgendaPart I Strategy & Financial Model
7:00 7:05 am Welcome Rob Williams Vice President, Investor Relations7:05 7:15 am Executing Our Growth Strategy Michael Dell Chairman and CEO7:15 7:40 am Financial Model Brian Gladden SVP, Chief Financial Officer7:40 7:55 am Strategy to Win in the Virtual Era Dave Johnson SVP, Corporate Strategy7:55 8:30 am Founders Panel Michael Dell Chairman and CEO
Bob Moul General Manager, Dell Boomi
Rob Meinhardt General Manager, Dell KACEPhil Soran Vice President, Dell CompellentMike Cote Vice President, Dell SecureWorks
8:30 8:45 am Break
Part II Solutions Domains8:45 9:00 am End-User Computing Solutions Jeff Clarke Vice Chairman, Global Operations &9:00 9:15 am Success in the Enterprise Brad Anderson SVP, Enterprise Solutions Group9:15 9:30 am Dell Services Steve Schuckenbrock President, Dell Services9:30 10:10 am Q&A Jeff, Brad and Steve
10:10 10:25 am Break
Part III Customer Relationships
10:25 11:00 am Customer Panel Karen Quintos SVP, Chief Marketing OfficerBrad Thompson Director, IT Infrastructure EngineerinBecky Sykes SVP, Chief Information Officer, CathAaron Beasecker VP, Information Technology, LopezClaus Moldt Global CIO and SVP, Service Delive
11:00 11:15 am Public & Large Enterprise Review Paul Bell President, Public and Large Enterpri11:15 11:30 am Consumer, Small & Medium Business Steve Felice President, Consumer, Small & Medi11:30 12:00 pm Q&A Karen, Paul and Steve
Part IV Lunch & Closing12:00 1:15 pm Executive Luncheon All
1:15 2:00 pm Q&A Michael and Brian
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The power to do more
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Executing Our Growth Strategy Efficient IT Solutions
Michael DellChairman and CEO
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Dell todayOur growth strategy
Efficient IT solutionsOpen, capable and affordable
with a mid-market design focus Next Gen Computing Solutions
and Intelligent Data Management
Services, Security & Cloud
End-User Computing
Long-term value creation Balanced liquidity, profitability and growth
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Our commitmentDelivering results, investing for growth and building on our stren
Develop & acquire key IPand sales capabilities
Deliver solutionsthat customers value
Capture growing shareof IT profit pool
Grow operating incomeand cash flow
8 acquisitions in last 12 months
$1B committed to organic growth &
$18 billion enterprise solutions and
New strategic solutions alignment
Significantly improved client profita
FY11 server, storage & networking gdollars up 32%
FY11 Non-GAAP operating income
1Q12 TTM cash flow from ops up 2
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Large
Business
500 5,000
$680B
Small & Medium
Business
1 499
$820B
Public / Education / Healthcare
$640B
Dells differentiationUnwavering focus on our customers
Source: AMI & company estimates
Global
Enterprise
5,000+
$290B
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Large
Business
Small & Medium
Business
Public / Education / HealthcareGlobalEnterprise
Large
Business
500 5,000
$680B
Small & Medium
Business
1 499
$820B
Public / Education / Healthcare
$640B
Global
Enterprise
5,000+
$290B
Dells differentiationTwo lensesmid-market and open, capable and affordable
Source: AMI & company estimates
Mid-Market Focus
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Large
Business
Small & Medium
Business
Public / Education / HealthcareGlobalEnterprise
Dells differentiationTwo lensesmid-market and open, capable and affordable
Source: AMI & company estimates
Mid-Market Focus
Added 5,000 growth focused team members46 data centers & 22 solutions centers
11 acquisitions in last 2 years
End-to-end solutions for the Virtual Era
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20
10
0
19%
16%
Services
Networking & SystemsInfrastructure Software
Servers &Storage
ApplicationSoftware
Client, Peripherals &Consumer Services
OpInc %
30 Next Gen Computing Solutions& Intelligent Data Management End-User Computing
Services, Security & Cloud
27%
8%
12%
Smartphones, TaTelecom Mobile
Refining strategy to focus on key solutions domaiGrowth opportunities drive future profit and growth
10%
Source: IDC & company estimates
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Next Gen Computing Solutions& Intelligent Data Management Services, Security& Cloud
Virtualization, vStart, AIMSystems Management, Modular
Data Centers, NetworkingFluid Data Architecture, SAN &Scale-out NAS, Deduplication
Multi-Vendor Support,BPO & Applications, IT
Infrastructure OutsourcingSecurity & CloudITaaS, SaaS, PaaS
Flexible & OptimizedValue Chain
Mobility SolutionsTablets & SmartphonesDesktop Virtualization
BPro
>
CF
End-UserComputing
Efficient IT SolutionsOpen, Capable, Affordable V
End-UserEnterprise
Locked on our strategyBuilding enterprise solutions that drive efficiency and flexibility for
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Next Gen Computing Solutions& Intelligent Data Management
Services, Security& Cloud
BPro
End-UserComputing
Efficient IT SolutionsOpen, Capable, Affordable V
End-UserEnterprise
Brad Anderson
Paul Bell Steve Felice Karen Quintos
Dave Johnson
Jeff Clarke
Steve Schuckenbrock
Built on enterprise solutions that drive efficiency and flexibility for
We are executing a growth strategy
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The power to do more
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Financial Model
Brian GladdenSVP, Chief Financial Officer
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Key messages
Company executing well on long-term strategy
Client business doing very well driven by cost, products and e
Disciplined resource allocation fueling significant investment capabilities and innovation
Enterprise growth accelerating storage and services positioneprofitable growth
Financial results progressing toward value creation framework
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GAAP OpInc
> 7%
GAAP OpInc
5.6%
CFOps >Net Income
CFOps $4.0Bvs. N.I. $2.6B
FY 11 resultLong-TermValue Creation
Executing our long-term value creation frameworSignificant progress toward improving and sustaining profitabilit
Revenue growth> 5-7%
Revenue $61.5B,up +16% Y/Y
CFOps
OpInc
$2.2B$3.4B
$3.0B$4.1B
4.1% 5.6%
5.6%
6.7%
FY10 FY11
GAAP Non-GAA
$3.9B
$4.0B
FY10 FY11
* Trailing twelve months since 1Q12
G i h li b i
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34%
1820%
Growth Markets Glob
Dell Industry
Great progress with client business
Key to two big markets mid-mmarkets*
Enables conversations about se
Drive opportunities for financinFinancial Services generating a
Outstanding cash flow & important entry point into adjacent pro
Source: IDC & Company Estimates
* Includes all regions with the exception of the US, Canada, Western Europe and Japan
FY10 FY11
Consumer Commercial
$30B$34B
14%
20%
FY11
Revenue Gross Margin
Positioned well for growth in commercial
Strong progress in cost structure and supply chainsupport continued confidence in client business
Efficient and asset light sustaining cash flowgeneration
Consumer+6%
Commercial+18%
Client Revenue Growth Y/Y Client Revenue GrowthFY11 Y/Y
S i bl COGS i
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4Q'09
43%
FY10
Contract Manufacturing% of Total Units
Transformation Cost*
Sustainable COGS improvements
* Transformation cost includes manufacturing labor & overhead, logistics & obsolescence
Driving competitive cost structure, and can grow business from h
Progress in COGS and gross margins
Reduced number of configurations resultingin materials reduction, faster time to market
Better products reduced warranty expenseand less obsolete inventory
Improved supply chain lower transformationand freight costs
Organizational scaling reduced overhead
Better forecasting building and shipping inbulk enabling ocean shipment
Improved planning matching productforecasting to retail seasonality
Better pricing selling to forecast, selling tosegment value
Di i li d ll ti
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Disciplined resource allocation
Margin performance allows us to invest in salesand more focused R&D
Sales specialists now make up nearly 30% of
our sales spend
R&D spend on servers and storage is projectedto be >70% of total R&D spend in FY12
World class levels of G&A spend is about flatcreating operating leverage as revenue growthaccelerates
Investments tied to P&L progress
will modulate investments based on progress Teams aligned and incentivized to achieve targets
around revenue, operating income and cashearnings
-34%
22%63%
R&D & Sales Spend1Q12 Y/Y
Client Enterprise
Genera
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Focus Areas Servers: $8B Storage: $2B Se
Enterprise growth is acceleratingStrategically positioned in growing IT markets
Total Enterprise(Including services)
Networking
ServersStorage
$9B
$18B
FY05 FY11
Revenue
Services
Revenue Mix
EnterpriseServices
S&P 14%6%
13%
17%
12%
16%
FY05 FY11
Client 67%55%
Significant growth in the past year
Mix shifting to Dell-branded offerings
Higher m
Strong g
Solution
Gross Marg
11
36
53
EnterpriseSolutions
& Services
S&P
Client
FY
D ll St
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Revenue $B
Dell StorageStrategic asset poised for growth
Key strengths
Mix shift opportunity from loreseller business to primarily Degross margin 1Q12 >40% vs. 1Q
Full complement of SAN solutiPowerVault, EqualLogic (iSCSI) Compellent (Fibre Channel) sto
As of 1Q12, Dell IP represents 7and nearly 90% of gross profits;decreases to
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$5.4B $5.6B
$7.7B
$10-11B
FY09 FY10 FY11 FY15 Goal
Revenue $B
Dell ServicesStrong platform for profitable growth
Services Backlog $14.1Bas of 1Q12
Key strengths
Integrated service company scomputing, managed services, services, application developme
Preferred provider leveragingexpertise horizontally, vertically
#1 in healthcare leading healttransformation holistic HealthExchange portfolio (ARRA & He
Updates
Multi-vendor support and remo
Investing in private/public/hybdelivering secure, enterprise bu
Security scaling & productizin
Focus on applications and BPOvertical expertise, optimized taleand technology migrations
CAGR
7-9%
$6.9B $7.2B
Contracted ServicesBacklog
Deferred ServicesRevenue
Broad portfolio well positioned for the future
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Broad portfolio well-positioned for the futureGenerating solid returns and mixing to more profitable solutions
Dell IP and innovation chanwith customers focused ooptimize efficiency and flex
Product mix shift to enterprservices key to improved anprofitability long-term
Executing well with profitabbusiness sustaining structuimprovement
Storage$2.3B / ~10%Target >15%
Services$7.7B / >20%
Client$33.7B / >5% $
Servers &Networking$7.6B / >10%
ProductsRevenue / OpInc %*
14% 17%
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Strategic Investment Rate
31%
6
$.0
$5.0
$10.0
$15.0
$20.0
FY02-06 FY0
Investment$B
R&D CAPEX Acquisition
Solid cash generation & increasing strategic invesProvides flexibility and fuels future growth
Strong cash flow generation model
Target share repurchase at 10-30% of FCF resources to accelerate share repurchaseselectively
Cash Flow Generation
*Strategic
Investment Rate
Capital Expenditures + Acquisitions + R&D
EBITDA + R&D + Rent Taxes
$3.4 $3.6$3.8 $4.0
$4.2
10x
15x
20x
25x
30x
35x40x
$0.0
$2.0
$4.0
$6.0
1Q'11 2Q'11 3Q'11 4Q'11 1Q'12
TTME
BITDA
/Interes
t
Expense
CFOps$B(TTM)
CFOps (TTM) Interest Coverage Ratio
Acquisitions will continue tofocus of strategic investment
Shifting mix of investments iand Capex to align with strate
=
Company executing well on long term strategy
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Company executing well on long-term strategyDelivering on our long-term valuation framework
Balanced Liquidity,Profitability & Growth
Revenue Growth> 5-7%
Long-termValue Creation
GAAP OpInc %
> 7%
CFOps> Net Income
Key Drivers
Shifting MixHigher margins
Improved growth ratesMore recurring revenues
Making key investmentsOrganic growth
Prudent acquisitions
ImproPro
Dim
Key Changes
Focus onsolutions domains
Next gen compute & IDMServices, security, cloud
End user computing
Committed to beingprofit-share leader
All lines of businessAll customer segments
Groin key
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Dells Strategy to Winin the Virtual Era
Dave JohnsonSVP, Corporate Strategy
The Virtual Era presents challenges for both the IT
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Trends Device proliferation Machine-to machine
connectedness Social community growth Data explosion Consumerization of IT Geographic wealth
distribution Virtualization Cloud computing
The Virtual Era presents challenges for both the ITand provider
Servers
Storage
Networking
Tablets/Smartphones/
PCs
Services
Systems infra-structure SW
Application SW
Increase
In
Complexity
ITUser
Consumer
SmallBusiness
MediumBusiness
To help customers address these challenges our
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To help customers address these challenges, our IT strategy delivers simplicity in 3 solution domain
Next Gen ComputingSolutions & Intelligent
Data Management
Services, Security &Cloud
End-User Computing
1
2
3
Efficien
tITSolutions
Open,A
ffordable,
Capable Intelligent compute & Fluid data
Todays solutions,
tomorrows innovations
Anytime, anywhere, any device
Competing boldly in each of these solution doma
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Inorga
Competing boldly in each of these solution domarequires organic and inorganic investmentsOne example:
EfficientITSolutions
Open,
Affordable,
Capable 1000 storage sales
specialists by end of 2011
800 storagedevelopment engineers
5 R&D centers
Organic
IntelligentData
Management
SAN & iSCSI
Fibre
NAS
Compressed
Fluid Data Architecture
Note: Headcount is cumulative forecast for the exit of FY12
Similar organic and inorganic investments are bei
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InorOrganic
Similar organic and inorganic investments are beiacross all 3 solution domains
EfficientITSolutions
Open,A
ffordable,
Capable
1,600 sales specialists,2,400 engineers,8 R&D sites
400 solution engineers,1000 security specialists,22 solution & 10 data centers
300 sales specialists,1,800 engineers,3 R&D sites
Next Gen ComputingSolutions & Intelligent
Data Management
Services, Security &Cloud
End-User Computing
1
2
3
Note: Headcount is cumulative forecast for the exit of FY12
We are taking a thoughtful, disciplined approach t
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We are taking a thoughtful, disciplined approach tacquisitions and integrations
Reinforcing our strategy
Disciplined financial criteria and diligence
Assessing cultural alignment
Preserving value through integration planning
Governing and overseeing constantly
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Founders PanelPhil Soran Bob MoulVice President, Dell Compellent General Manager, Dell Boomi
Rob Meinhardt Mike Cote
General Manager, Dell KACE Vice President, Dell SecureWork
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End-User Computing Solutions
Jeff ClarkeVice Chairman, Global Operations & End-User Computing
End-User Computing is a trillion-dollar category
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Includes all solution elements devices, data, software, service
End-User Computing incontinuum of computinperipherals, and related
Category is growing at driven by device prolifeexplosive growth in datcreation
New form factors and cusage behaviors createmany more devices, grearound the box, new s
Source: Industry analysis and internal estimates
CAGR
2011-2014
SP Voice 17%
Mobile Data 31%
Mobile Apps/Svcs 28%
Smartphone 13%
Tablet 20%
PC Mobile Data 21%
PC SW/Services 6%
Peripherals,Imaging Displays
3%
PCs 7%
$1.5T
$1.0T
$0.5T
2011 2014
$1.0T
$1.4T
End-User Computing
$34 billion End-User Computing solutions busines
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Deliver solutions
Repeatable operational model standardize, simplify,
Superior customer insights
Enablers
Strategicinitiatives
Innovation process to secure IP
Reduce complexity toachieve competitivecosts/lead times
Refocus efforts toward highervalue areas for Dell
Establish repeatableprocesses to sustain gains
Strengthen the core Exp
Develop comprehensivesolutions based on our deepunderstanding of customerneeds
Provide compelling devicesplus the tools to secure andmanage hardware, softwareand data
Add tablesolutionscommerccustomer
Lead the new com
1 3
With significant growth potential
2
Renewed competitiveness in our core business
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43%53
FY10 Q1 F
0%
19%
43%>50%
FY10 Q1 FY11 Q1FY12 FY13 Exit
5%
23%
42%
70%
FY10 Q1 FY11 Q1 FY12 FY13 Exit
Structural changes ahead of plan, delivering improved profitabili
ContracPopular, pre-configured offers Consumer Eligible Ocean Ship
Most popular configurations,logically bundled
Low complexity, low cost
Industry standard service /support
Complexity reduction Repeatable process Higher
Value chain aligned end-to-end
Customer driven product andsupply chain design
Strong supply chain performance
High value p
Optimized c
Personalizat
Premium ca
Renewed competitiveness in our core business
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Simplified offerings aligned to customer buying characteristics (>99% fewer configuration
Enhanced online
98% next day shipment
Exactly what you want faster than anyone
>30% manufacturing cost reduction
2+% COGS improvement due to commodity leverage and reuse
Revenue growth that outperforms the industry
Profitability of 5% OpInc
What we said we would do
We delivered on the commitments we made one year ago
Deliver solutions for the End-User
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Achieving an accretive revenue growth premium
Focus on commercial customers andprosumers
Win in growth markets where the PC
penetration is lower but growing fast, andmobile growth is fastest in the world
Growth markets andsegments
Define and design complete solutions bybuilding on our deep customer relationshipsand targeting specific, emerging needs
Capture greater share of wallet per customerEnd-User solutions
Technologyleadership
Accelerate innovation that drives industry-leading form factor and solution design
Invest in software and mobility solutions
Expanding our reach in End-User Computing
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Devices and solutions that complement the core and link to ente
Launch differentiated set of tablets andsmartphones tightly linked to mobility solutions
Focus on commercial and prosumer segments
with enterprise-grade technology
Expand the portfolioin mobile
Target Light IT organizations with solutionsthat protect data and simplify the managementof multiple devices
Drive greater efficiency and lower cost acrossthe entire End-User Computing portfolio
Build differentiatedaround the box
solutions
Investigate new or hybrid business models forcomputing
Expand our portfolio of virtualization optionstargeting specific sub-segments
Lead thedevelopment of newcompute paradigms
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Success in the Enterprise
Brad AndersonSVP, Enterprise Solutions Group
Strategy has not changed, our approach is differen
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Customer challenge Industry response Dell response
VM explosion: more machines,
more dynamic
Specialty tools that automate and
optimize virtualization stacks
Streamlined IT proc
physical and virtualData explosion: more data,less structured
Focus on a new tier of storage foreach usage model
Focus on an architetiers fluidly and intel
Scale network to match data centervirtualization requirements
Complex static networking topologiesSimplified, flat netwscale and virtual ma
Agility: creating services from silosPhysically integrated pods thatencapsulate complexity
Virtually integrated smaintain choice and
Virtual Era offers an opportunity and were taking advantage by ddifferentiated innovation in IT operations and data management
Compelling value focused in a few key areasCh i th i f ti ith 5 k i iti ti th t
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Changing the economics of operations with 5 key initiatives thatareas where Dell can offer unique and differentiated value
Focus areas Key initiatives
Manage Datato Extract
Value
NextGeneration
Architectures
Dells unique value
Unified StorageArchitecture
Developing an architecture that unifies storagoffers advanced functionality that can be used
SharedInfrastructure/Orchestration
Designing and constructing systems to delive
management, orchestration and automation
System Mgmtfor
Virtual/Hybrid
Addressing physical and virtual management enabling migration between deployment mod
Fluid DataArchitecture
Coupling a unified architecture with intelligenenables data movement and access while bala
InformationCentric
Workloads
Extending adoption for key technologies by pfunctionality with a level of intelligence, drivin
Dell is uniquely positioned to deliverB ildi t k d d i t t i l di t
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Building on our proven track record and investment in leading te
Mid-marketdesign point
Proven trackrecord indeliveringtechnologiesfor themid-market
Provenacquisition
strategy
Invested indifferentiatedIP andacceleratingcustomeradoption
Deliveringplatforms of
the future
Investmentsare inplatformsthat supportthe VirtualEra
Leadingvirtualization
disruptors
Leadersin keyvirtualizationenablementtechnologies
Success requires multi-dimensional innovationC ti i ti i b t f b d t h l i d l
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Continue innovation in best of breed technologies and leverage solutions that address key operational challenges
Fluid dataarchitecture
Intelligent computearchitecture
Optimized architectures
to address challenges in compute,networking, and storage environments
End-to-end so
to address the opchallenges of the V
Virtual
networkarchitecture
Unified Clinical
Modular Data
Virtual Integrate
vStart
The opportunity is clear, were positioned to capitWere harnessing the disr ptors le eraging o r freedom to inno
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Were harnessing the disruptors, leveraging our freedom to innovcapitalizing on our mid-market expertise In fact, we have done
Opportunity Inflection Mo
Virtualization is
forcing a new wayof purchasing andoperating ITinfrastructure
Explosion of datais forcing a focus
on how data isused, effecting thearchitecture,interaction andaccess of data
5
Servers &Networking
Storage
EnterpriseSolutions
Revenue
FY
Rev
1.9%
34.2%
9.1%
28.5%
22.2%
$11B
$21B
$32B
L2/L3 FixedPort Ethernet
Switches
iSCSIStorage
StorageSystems
x86 Serversin U.S.
x86 Servers
Industry Revenue Share
CY10
#2 in U.S.revenue
share
#1 in iSCSIrevenue
share
Source: Industry analysis and internal estimates
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Dell ServicesIntegrating Todays Solutions withTomorrows Innovations
Steve SchuckenbrockPresident, Dell Services
Virtual Era places extreme demands on IT
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IncreasinInnov
Need for ResDrive to Improve
Utilization
ExtremeDemands
on IT
Demand for Efficiency Demand for
Mobility and P
Anything, Anyw
SaaS, Analytics
Spikes in Dem
Explosion of d
Compressed C
Business Outc
High cost singletenantapplication models
Underutilization ofdedicated hardware
Suboptimal skill mixes
Increasing Value Focus
Ongoing IT budget pressure
Demand for business value
Vendor pricing
Disruptive next generation models create game chopportunities
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opportunities
Talent CapabilitiesHigh talent, low cost resourcesorganized by an optimizedworkforce pyramid
Cloud ServicesIT delivered as a service throughprivate, public, and/or hybridcloud models
Next Gen InfrastructureDesigned to take advantage ofmodular, hyper-scale andhigh-density principles
Efficiency Impact Flexibil
Dramatically lowered cost
Reduced latency
Simplified management
Highly scalable
Dynamic workload shift toachieve 4-5X efficiency gain
Pooled resources/multi-tenancy
Simplified updates
Cost linked to consumption
Capital avoidance
Optimized staffing pyramid leading toimproved resource utilization
Remote support fromlow cost locations
Improved access to specialized skillsand technical expertise
Standardizat
Right-sized
Just-in-tim
On-demandstorage capa
Easy provisio
SaaS Offerin
Enhanced re
Industry solu
Nextgenerationmodels
Solutions designed for the mid-marketBroad Vertical Portfolio
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Next Generation Solutions
Security
Security ManagementData Center &Cloud Security
Application &Network Security
EndMobile
Support ApplicationsInfrastructure
Multi-Vendor
Deployment andConfiguration
IndustrializedServices
SaaS
CloudRe-platforming
Consulting(Cloud Migration)
Cloud Services
RIMO
Consulting(Transformation)
DomainS
TransKPO a
Broad Vertical PortfolioEfficient/Flexible
Dell SecureWorks
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RSA Breach Puts APT Back in Spotlight
Lockheed Martin Hit by Security Breach
Hacking at Citi is Latest Data Scare
White House Targeted in Gmail Hack
Nintendo Gets Gamed By Hackers
Hackers Break Into U.S. Senate Computers
New scope services signings since start of FY12
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Approximately $800 Million YTD
17 Public and 11 Large Enterprise
22 Americas, 5 EMEA and 1 LATAM
Almost 200 for SecureWorks
Reid HospitalFull Outsourcing of Revenue Cycle,including Admitting, Coding/HealthInformation Management, Billing, andCollections
Nuclear Regulatory CommissionFull ITO, including Data CenterHosting and Support Services Middle East academic a
for childrens hospital -
deliver a total healthca
Large South American desk and field support s
Midwest university reseimplementation and legmodernization
Global hospitality compIT services and solution
U.S. based professiona
consolidation, infrastrumanaged support servi
New services signings are aggregate YTD signings in FY12
Services is a gDell
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Services is a gand Dell is invstrategic capaincluding buia world class
We are leveratechnology tothis disruptivein the industr
Dell Services and impleme
architecturesmovement todesigning opeaffordable ensolutions
Services In Summary
We areexecuting agrowth
strategy
2011 Dell Financia
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Q&A
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Customer Panel
Karen Quintos
SVP, Chief Marketing Officer
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Customer Panel
Brad Thompson Aaron BeaseckerDirector, IT Infrastructure Engineering VP, Information Technology,Target Lopez Foods
Becky Sykes Claus Moldt
SVP, Chief Information Officer Global CIO and SVP, Service DelivCatholic Health Partners Salesforce.com
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Public & Large EnterpriseReview
Paul BellPresident, Public & Large Enterprise
PLE profitability: strategy resonating with customeResults reflects PLE momentum
LELE
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Highest OPINC $s and % inmargin the highest over pastregions
Continued strength in corpo
NB growth of 16% Y/Y Services up 7% Y/Y with dou
projects, reflecting expandeexpertise
Public
OpInc up 24% Y/Y higher pricing discipline, and lowe
US Federal budgetary constspending in Western Europe
Revenue in growth marketsled by China (+50% Y/Y)
* Includes all regions with the exception of the US, Canada, Western Europe and Japan
9.2% 7.7%
9.8%
$1
$2
$3$4
$5
$6
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY10 FY11 FY12
Public
5.7% 6.7%
11.3%
$1$2
$3
$4
$5
$6
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
LE
FY10 FY11 FY12
Revenues ($B) Operating Margin %
Revenues ($B) Operating Margin %
PLE go to market (GTM): positioned to win
Industry Growth Rates (CY2011) GTM Diffe
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Focused on midopportunity
Key IP/Technolo
Open, capable asolutions
Unlock efficienccritical IT dollars
Vertically relevan
Note: Mature markets include the U.S., Canada, Western Europe and Japan;Total Commercial includes Large Enterprise, Public and SMB
Industry Growth Rates (CY2011) GTM Diffe
9%
6%
9%
5%
14%
13%
15%
3%
5%
5%
-1%
3%
-7%
4%
-10.0% 0.0% 10.0% 20.0%
Commercial IT Services
Commercial Networking
Commercial Storage
Public Server
Large Enterprise Server
Public Client
Large Enterprise Client
Mature Market Growth Markets
Source: (1) IDC WW Quarterly PC Forecast Q1 2011
Our focus: continue to transform our business to customers to do more
D li i
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Building DeeperBusiness Relationships
Keep my sales rep
Limit account transitionsto critical few
Know my businessSales Transformationand investment in salesteams to createcustomer value
545 sales people trainedin CCV
(Create Customer Value)
Customer Experience
Improve Business to
Business OnlineEnable customers tomaximize on-lineexperience, use Dell as aresource
Free-up sales timeSales ProcessReengineering improvedefficiency program
63% improvement inloyalty scores over
past 5 quarters
DeliveringVertically-Relevant
Solutions
Give me solutions that
address a key businesschallenge Im facing inmy industryPre-configuredsolutions that addresscustomer mission
North America Publicvertical solutions
increased +13% Q/Q
In
spsatra
Fgrop
T
540or h
Enabling CIOs to unleash innovation from a positiof strength
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Post-merger, optimize datacenters globally
Redesigned, consolidated,deployed and optimized
global data centers Enabled transformation and
managed services
Streamline IT toexecution of buwork
Designed and d
end solution an Cut costs, reduc
and ensured IT business needs
Business challenges withsecurity, compliance,manageability of data,
Data center strategy leveragingvirtualization and datamanagement technology
Improved IT efficiency,responsiveness and productivity
Create first fullygovernment-opcomputing serv
Nebula's high-darchitecture allodramatically redfootprint.
Nebula is 50% mefficient than trcenters.
Key takeawayDell will enable CIOs to deliver more value and innovation
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Hardwareprovider
The Old Dell
Key takeawayDell will enable CIOs to deliver more value and innovation
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Todays Dell
Delivering the rightacquisition innovation +Dell IP solutions
Focused onrelationships, not
transactions
IT strategy ecustomers tinvestmentsmatters mo
Committedcustomers abusiness ob
Strategicadvisor formission-critical IT
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The power to do more
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Consumer, Small & Medium BusinessReview
Steve FelicePresident, Consumer, Small & Medium Business
CSMB profitability ramping as mix improvesResults reflect stronger underlying economicsSMBSMB
R ($B) O ti M i %
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Record OpInc driven by opexecution, pricing disciplin
Improved mix of servers, sand services mix up 200+300+ bps over past 2 years
Strong storage business significantly outpacing maquickly replacing EMC
Consumer
Highest margin in two yea
simplification, customer saimproved pricing discipline
Higher value, more differe
Outstanding execution in
7.7% 8.9%
12.3%
$1
$2
$3
$4
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Revenues ($B) Operating Margin %
0.0% -0.7% 0.0%
2.1%
4.5%
$1
$2
$3
$4
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Consumer
* Includes all regions with the exception of the US, Canada, Western Europe and Japan
Revenues ($B) Operating Margin %
FY10 FY11 FY12
FY10 FY11 FY12
CSMB go to market (GTM): a differentiated approaLocalization of global strategymake open, capable and affordable relevin target geographies and channels
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Geographic coveraChannel approach
Direct)
Products & solutio
Supply chain strate
Service and suppo
Customer segmen
Note: Mature markets include the U.S., Canada, Western Europe and Japan;FY11 revenue mix of growth markets was 31%, up from 25% in FY10 and 21% in FY09
Industry Growth Rates (CY2011) GTM Differeng g g p
9%
7%
10%
9%
6%
4%
1%
-6%
-10% 0% 10% 20%
Enterprise Security & Services (2)
Enterprise Servers, Storage &
Networking (2)
SMB Client (1)
Consumer Client (1)
Developed Countries Growth Markets
Source: (1) IDC WW Quarterly PC Forecast Q1 2011, (2) AMI 2010 Market Opportunity Model
Our SMB GTM focus: meeting customer needs onterms, and enabling their growth
G h C
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GrowthMarket Focus
Incredible momentumin our brand position:
Leading brand positionin China, India andBrazil
Field coverageinvestments targetinggrowth markets
SMB Rev Growth (Y/Y)*Growth markets +28%
Developed countries +12%
CustomerExperience
Becoming thecustomers trusted
advisor
Powerful combinationof direct & channel
Operational executionexcellence
Providing highestquality
Customer Experience45% Y/Y Improvement
in loyalty scores
Solutions &Solution Selling
Solutions relevant forSMBs
EqualLogic /Compellent DataMgmt
KACE Secure ITasset Mgmt
Boomi enablingbest of breed Cloud
Storage Results (Y/Y)*Dell IP Rev Growth: 33%Storage GM% +800 bps
EF
Sa
Oa
Srec
H
Source: Dell Q4 2010 brand tracker, tier one emerging markets * TTM
Our consumer GTM focus: targeting opportunitiesattractive customer and market segments
G th M k t C t
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Growth MarketFocus
Enhancing our brandposition:
Brazil: #1
India: #1
China: Tied for #1
Launching XPS Streak10 Pro in China
Rev Growth (Y/Y)*Brazil, China & India +33%
Other Growth Markets +27%
CustomerSegmentation
Targeted marketingcommunications
Example: XPS 15zthinnest 15in PC onthe planet
Focus on keysegments:
Example: XPS 15ztargeting Prosumers
Q1 Share >$800+140 bps Q/Q
Profitability
Strong operationalexecution
Disciplined pricingapproach
Significant increase infixed configurationsand ocean shipping ofeligible units
Q1 Profitability (Y/Y)+400 bps
B
Md
Xim
F
Cu
Source: Dell Q4 2010 brand tracker, tier one emerging markets; IDC WW Quarterly PC Forecast Q1 2011 * TTM
Final thoughts
O CSMB B i
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positioned to use small and medium business strength and m
focus as competitive differentiation has turned its focus to selling solutions and leveraging IP port
will continue to focus on attractive segments of the market (emarkets)
has improved profitability in our Consumer business; we plan
healthy profits in this business over the long-term
Our CSMB Business
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Q&A
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Michael Dell Brian Gladden
Chairman and CEO SVP, Chief Financial Officer
Q&A
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Q&A
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Thank you
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The power to do more
DELL INC.Reconciliation of Non-GAAP Financial Measures
(in millions except per share data and percentages)
Supplement non-GAAP reconciliation
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(in millions, except per share data and percentages)(unaudited)
Twelve Months EndedTTM FY11 FY10 FY
Apr il 29, January 28, January 29, Janua2011 2011 2010 20
GAAP operating income $ 4,126 $ 3,433 $ 2,172 $
Non-GAAP adjustments:Amortization of intangibles 353 349 205
Severance and facility actions 91 129 481 Acquisition-related 131 98 116 Stock option accelerated vesting charges - - -Other(1 - 140 -
Non-GAAP operating Income $ 4,701 $ 4,149 $ 2,974 $
GAAP operating income 6.7% 5.6% 4.1%
Non-GAAP adjustment 0.9% 1.1% 1.5%Non-GAAP operating income 7.6% 6.7% 5.6%
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.
(1)Other for the fiscal year ended J anuary 28, 2011 includes amounts for the $100 million settlement of the SEC investig
and a $40 million settlement for a securities litigation matter, which are both recorded in operating expenses.