Dell Improves Business Performance Through Continued Execution of Strategic Agenda

* Revenue and Earnings Improve Sequentially
* Cash Flow from Operations Exceeds $1 Billion; Operating Expenses Down 14
Percent
* Operating Income 5.2 Percent of Revenue

ROUND ROCK, Texas--(Business Wire)--
Dell reported improved sequential financial results for its fiscal
second-quarter 2010. Product shipments, revenue, operating income, gross margin
and earnings were all higher than in the first quarter, and the company
continued to reduce operating expenses.

* Shipments were up 10 percent, revenue 3 percent from the first quarter amid
stabilizing spending on information technology. Combined revenue from servers
and storage was up 7 percent sequentially. Revenue of $12.8 billion was 22
percent lower than the year-ago quarter.
* Earnings were 24 cents, including pretax expenses of $87 million, or four
cents per share, for organizational effectiveness actions.
* Cash flow from operations was $1.1 billion, as Dell ended the quarter with
$12.7 billion in cash and investments.
* Gross margin was 18.7 percent of revenue as strong improvement in cost of
goods sold, disciplined pricing, a sequential increase in sales from enterprise
products, and a $69 million buyout of a revenue-sharing agreement by a vendor
offset previously highlighted pressure from component costs, competitive pricing
and revenue mix in client systems.

* Operating expenses were 13.5 percent of revenue and $288 million, 14 percent
lower than in last year`s second quarter.
* Operating income was $671 million.

Second Quarter Results:

(In millions) FY10 FY09 Change
Revenue $12,764 $16,434 (22%)
Operating Income $671 $819 (18%)
Net Income $472 $616 (23%)
EPS $0.24 $0.31 (23%)
All growth rates are year-over-year.

Business Units:

* Large Enterprise revenue totaled $3.3 billion, a 3-percent sequential and a
32-percent decrease from a year earlier. Lower IT spending by large companies
continued in all major regions of the world. Operating income in the segment was
$172 million.
* Public revenue was $3.8 billion, up 20 percent sequentially and a 16-percent
decrease from a year ago. Growth in Dell`s larger government accounts and
seasonal education business partially offset weaker demand in other parts of the
business - state and local government and health care. Operating income was $383
million, a 16-percent year-over-year increase.
* Small and Medium Business revenue was$2.8 billion, a 5-percent decrease
sequentially and a 29-percent decrease from the fiscal 2009 quarter. Operating
income was $246 million, or 8.7 percent of revenue, up 40 basis points from last
year as gross margin improved during the quarter.
* Consumer had a 17-percent year-over-yearincrease in unit volumeand revenue of
$2.9 billion, up 2 percent sequentially and a 9-percent decline from a year ago.
Operating income was $89 million, including a $53 million benefit from the
vendor transaction.

Strategic Progress:

* Since launching its $4 billion cost initiatives last fiscal year, about 70
percent of Dell`s total product volume has been redesigned and optimized to
reduce costs.
* Dell further strengthened its enterprise position in the quarter. Revenue from
EqualLogic storage systems was up 42 percent year-over-year. Server product
shipments were up 12 percent and revenue was up 9 percent sequentially.
* Dell continues to build its emerging country presence as combined revenue from
the BRIC countries - Brazil, Russia, India and China - grew 16 percent
sequentially. Sales in BRIC now comprise 10 percent of total company revenue.

Quotes:

Michael Dell, chairman and chief executive officer: "We have been reducing
complexity in our organization and significantly lowering operating costs, in
anticipation of improvement in the global economy and IT spending. If current
demand trends continue, we expect revenue for the second half of the year to be
stronger than the first half. We are expanding our capabilities in enterprise
technology and services and investing in our core business to distinguish Dell
both with customers and in operating performance."

Brian Gladden, Dell`s chief financial officer: "This quarter again demonstrates
the discipline with which we are managing our business and further strengthening
our balance sheet. The best path for Dell remains one focused on profitable
growth, lower costs and smart use of working capital."

Company Outlook:

* In the third quarter, the company expects seasonal demand improvements from
the Consumer and U.S. federal government businesses, but the quarter is also
generally a period of slower demand from large commercial customers in the U.S.
and Europe. Dell believes a refresh cycle in commercial accounts is more likely
to occur in 2010, with IT spending improving first in the U.S. The company
continues to see pressure in the form of component costs and areas of aggressive
pricing in the near term, and continues to take actions to offset these items.
The company will continue to focus on implementing cost improvements and
strategic investments to improve operations for the long term.

About Dell

Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology
and services they need and value. For more information, visit www.dell.com. To
hear a replay of the second-quarter analysts` call with Michael Dell, chairman
and CEO, and Brian Gladden, CFO, go to www.dell.com/investor, or to communicate
directly with Dell, go to www.dell.com/dellshares.

Special Note:

Statements in this release that relate to future results and events (including
statements about our future financial and operating performance, anticipated
customer demand and anticipated component prices) are forward-looking statements
based on Dell's current expectations. Actual results and events in future
periods may differ materially from those expressed or implied by these
forward-looking statements because of a number of risks, uncertainties and other
factors, including: weakening global economic conditions and instability in
financial markets; our ability to reestablish a cost advantage over our
competitors; our ability to generate substantial non-U.S. net revenue; our
ability to accurately predict product, customer and geographic sales mix and
seasonal sales trends; information technology and manufacturing infrastructure
failures and breaches in data security; our ability to effectively manage
periodic product transitions; disruptions in component or product availability;
our reliance on vendors for quality product components, including reliance on
several single-source or limited-source suppliers; our ability to access the
capital markets; risks relating to our internal controls; unfavorable results of
legal proceedings, including the continuing SEC investigation into certain
accounting and financial reporting matters; our acquisition of other companies;
our ability to properly manage the distribution of our products and services;
the success ofour cost-cutting measures; effective hedging of our exposure to
fluctuations in foreign currency exchange rates and interest rates; counterparty
default risks; obtaining licenses to intellectual property developed by others
on commercially reasonable and competitive terms; our ability to attract, retain
and motivate key personnel; loss of government contracts; expiration of tax
holidays or favorable tax rate structures, or changes in tax laws; changing
environmental laws; and the effect of armed hostilities, terrorism, natural
disasters and public health issues. For a discussion of those and other factors
affecting our business and prospects, see Dell`s periodic filings with the
Securities and Exchange Commission. We assume no obligation to update
forward-looking statements.

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

Dell and Dell EqualLogic 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 31, May 1, August 1,
2009 2009 2008 Sequential Yr. to Yr.

Net revenue
Products $ 10,623 $ 10,232 $ 14,147 4% (25%)
Services, including software related 2,141 2,110 2,287 2% (6%)
Net revenue 12,764 12,342 16,434 3% (22%)

Cost of net revenue
Products 8,978 8,786 12,161 2% (26%)
Services, including software related 1,395 1,388 1,446 1% (3%)
Total cost of net revenue 10,373 10,174 13,607 2% (24%)

Gross margin 2,391 2,168 2,827 10% (15%)

Selling, general and administrative 1,571 1,613 1,840 (3%) (15%)
Research, development and engineering 149 141 168 5% (12%)
Total operating expenses 1,720 1,754 2,008 (2%) (14%)

Operating income 671 414 819 62% (18%)

Investment and other income (expense), net (42 ) (2 ) 18 N/M (337%)
Income before income taxes 629 412 837 53% (25%)
Income tax provision 157 122 221 29% (29%)
Net income $ 472 $ 290 $ 616 63% (23%)

Earnings per common share:
Basic $ 0.24 $ 0.15 $ 0.31 60% (23%)
Diluted $ 0.24 $ 0.15 $ 0.31 60% (23%)

Weighted average shares outstanding:
Basic 1,955 1,949 1,991 0% (2%)
Diluted 1,960 1,952 1,999 0% (2%)

Percentage of Total Net Revenue:
Gross margin 18.7 % 17.6 % 17.2 %
Selling, general and administrative 12.3 % 13.1 % 11.2 %
Total research and development 1.2 % 1.1 % 1.0 %
Operating expenses 13.5 % 14.2 % 12.2 %
Operating income 5.2 % 3.4 % 5.0 %
Income before income taxes 4.9 % 3.3 % 5.1 %
Net income 3.7 % 2.3 % 3.7 %
Income tax rate 25.0 % 29.6 % 26.4 %

Net Revenue by Product Category:
Mobility $ 3,891 $ 3,875 $ 4,895 0% (21%)
Desktop PCs 3,319 3,163 4,954 5% (33%)
Software and Peripherals 2,382 2,246 2,790 6% (15%)
Servers and Networking 1,403 1,286 1,733 9% (19%)
Enhanced Services 1,218 1,238 1,372 (2%) (11%)
Storage 551 534 690 3% (20%)
Consolidated net revenue $ 12,764 $ 12,342 $ 16,434 3% (22%)

Percentage of Total Net Revenue:
Mobility 30 % 32 % 30 %
Desktop PCs 26 % 26 % 30 %
Software and Peripherals 19 % 18 % 17 %
Servers and Networking 11 % 10 % 11 %
Enhanced Services 10 % 10 % 8 %
Storage 4 % 4 % 4 %

Net Revenue by Global Segments:
Large Enterprise $ 3,285 $ 3,400 $ 4,806 (3%) (32%)
Public 3,798 3,171 4,510 20% (16%)
Small and Medium Business 2,820 2,967 3,958 (5%) (29%)
Consumer 2,861 2,804 3,160 2% (9%)
Consolidated net revenue $ 12,764 $ 12,342 $ 16,434 3% (22%)

Percentage of Total Net Revenue:
Large Enterprise 26 % 27 % 29 %
Public 30 % 26 % 28 %
Small and Medium Business 22 % 24 % 24 %
Consumer 22 % 23 % 19 %

Consolidated Operating Income:
Large Enterprise $ 172 $ 192 $ 259
Public 383 293 331
Small and Medium Business 246 230 330
Consumer 89 (1 ) 29
Consolidated segment operating income 890 714 949
Severance and facility actions (87 ) (185 ) (25 )
Broad based long-term incentives (92 ) (76 ) (78 )
Amortization of intangible assets (40 ) (39 ) (27 )
Consolidated operating income $ 671 $ 414 $ 819

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

DELL INC.
Condensed Consolidated Statement of Operations and Related Financial Highlights
(in millions, except per share data or as otherwise noted)
(unaudited)

Six Months Ended % Growth Rates
July 31, August 1,
2009 2008 Yr. to Yr.

Net revenue
Products $ 20,855 $ 28,103 (26%)
Services, including software related 4,251 4,408 (4%)
Net revenue 25,106 32,511 (23%)

Cost of net revenue
Products 17,764 24,008 (26%)
Services, including software related 2,783 2,711 3%
Total cost of net revenue 20,547 26,719 (23%)

Gross margin 4,559 5,792 (21%)

Selling, general and administrative 3,184 3,752 (15%)
Research, development and engineering 290 320 (9%)
In-process research and development - 2 (100%)
Total operating expenses 3,474 4,074 (15%)

Operating income 1,085 1,718 (37%)

Investment and other income (expense), net (44 ) 143 (131%)
Income before income taxes 1,041 1,861 (44%)
Income tax provision 279 461 (39%)
Net income $ 762 $ 1,400 (46%)

Earnings per common share:
Basic $ 0.39 $ 0.70 (44%)
Diluted $ 0.39 $ 0.69 (43%)

Weighted average shares outstanding:
Basic 1,952 2,013 (3%)
Diluted 1,956 2,019 (3%)

Percentage of Total Net Revenue:
Gross margin 18.2 % 17.8 %
Selling, general and administrative 12.7 % 11.5 %
Total research and development 1.1 % 1.0 %
Operating expenses 13.8 % 12.5 %
Operating income 4.3 % 5.3 %
Income before income taxes 4.1 % 5.7 %
Net income 3.0 % 4.3 %
Income tax rate 26.8 % 24.8 %

Net Revenue by Product Category:
Mobility $ 7,766 $ 9,744 (20%)
Desktop PCs 6,482 9,735 (33%)
Software and Peripherals 4,628 5,531 (16%)
Servers and Networking 2,689 3,451 (22%)
Enhanced Services 2,456 2,716 (10%)
Storage 1,085 1,334 (19%)
Consolidated net revenue $ 25,106 $ 32,511 (23%)

Percentage of Total Net Revenue:
Mobility 31 % 30 %
Desktop PCs 26 % 30 %
Software and Peripherals 18 % 17 %
Servers and Networking 11 % 11 %
Enhanced Services 10 % 8 %
Storage 4 % 4 %

Net Revenue by Global Segments:
Large Enterprise $ 6,685 $ 9,727 (31%)
Public 6,969 8,091 (14%)
Small and Medium Business 5,787 8,202 (29%)
Consumer 5,665 6,491 (13%)
Consolidated net revenue $ 25,106 $ 32,511 (23%)

Percentage of Total Net Revenue:
Large Enterprise 27 % 30 %
Public 28 % 25 %
Small and Medium Business 23 % 25 %
Consumer 22 % 20 %

Consolidated Operating Income:
Large Enterprise $ 364 $ 645
Public 676 608
Small and Medium Business 476 660
Consumer 88 117
Consolidated segment operating income 1,604 2,030
Severance and facility actions (272 ) (131 )
Broad based long-term incentives (168 ) (128 )
In-process research and development - (2 )
Amortization of intangible assets (79 ) (51 )
Consolidated operating income $ 1,085 $ 1,718

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

DELL INC.
Condensed Consolidated Statement of Financial Position and Related Financial Highlights
(in millions, except for "Ratios" and "Other information")
(unaudited)

July 31, May 1, August 1,
2009 2009 2008
Assets:
Current assets:
Cash and cash equivalents $ 11,699 $ 9,691 $ 8,623
Short-term investments 299 434 410
Accounts receivable, net 5,403 4,278 6,451
Financing receivables, net 2,252 1,775 1,629
Inventories, net 839 842 1,104
Other 3,348 2,890 3,559
Total current assets 23,840 19,910 21,776
Property, plant and equipment, net 2,117 2,181 2,588
Investments 746 568 501
Long-term financing receivables, net 263 445 348
Goodwill 1,748 1,742 1,753
Purchased intangible assets, net 646 684 781
Other non-current assets 698 659 660
Total assets $ 30,058 $ 26,189 $ 28,407

Liabilities and Equity:
Current liabilities:
Short-term debt $ 49 $ 101 $ 129
Accounts payable 9,698 7,844 11,215
Accrued and other 3,765 3,513 4,271
Short-term deferred enhanced services revenue 2,775 2,683 2,572
Total current liabilities 16,287 14,141 18,187
Long-term debt 3,394 2,396 1,840
Long-term deferred enhanced services revenue 3,051 2,954 3,117
Other non-current liabilities 2,701 2,468 2,357
Total liabilities 25,433 21,959 25,501
Redeemable common stock - - 83
Stockholders' equity 4,625 4,230 2,823
Total liabilities and equity $ 30,058 $ 26,189 $ 28,407

Ratios:
Days of sales outstanding (1) 42 34 38
Days supply in inventory 7 7 7
Days in accounts payable 84 69 74
Cash conversion cycle (35 ) (28 ) (29 )

Average total revenue/unit (approximate) $ 1,280 $ 1,360 $ 1,420

Note: Ratios are calculated based on underlying data in thousands.

(1) Days of sales outstanding ("DSO") is based on the ending net trade
receivables and most recent quarterly revenue for each period. DSO includes the
effect of product costs related to customer shipments not yet recognized as
revenue that are classified in the other current assets. At July 31, 2009, May
1, 2009, and August 1, 2008, DSO and days of customer shipments not yet
recognized were 38 and 4 days, 31 and 3 days, 35 and 3 days, respectively.

DELL INC.
Condensed Consolidated Statements of Cashflows
(in millions, unaudited)

Three Months Ended Six Months Ended
July 31, August 1, July 31, August 1,
2009 2008 2009 2008
Cash flows from operating activities:
Net income $ 472 $ 616 $ 762 $ 1,400
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 201 196 402 379
Stock-based compensation 79 78 146 128
In-process research and development charges - - - 2
Effects of exchange rate changes on monetary assets and
liabilities denominated in foreign currencies 26 (20 ) 26 (110 )
Deferred income taxes (101 ) (53 ) (91 ) (19 )
Other 81 47 173 85
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable (948 ) (495 ) (537 ) (392 )
Financing receivables (352 ) (135 ) (379 ) 19
Inventories 5 153 29 77
Other assets (571 ) (281 ) (24 ) (473 )
Accounts payable 1,801 324 1,318 (328 )
Deferred enhanced services revenue 62 264 40 405
Accrued and other liabilities 321 414 (28 ) 78
Change in cash from operating activities 1,076 1,108 1,837 1,251

Cash flows from investing activities:
Investments:
Purchases (348 ) (616 ) (776 ) (788 )
Maturities and sales 340 1,318 982 1,752
Capital expenditures (99 ) (142 ) (179 ) (264 )
Proceeds from sale of facility and land 16 44 16 44
Acquisition of business, net of cash received - 5 (3 ) (165 )
Change in cash from investing activities (91 ) 609 40 579

Cash flows from financing activities:
Repurchase of common stock - (1,420 ) - (2,451 )
Issuance of common stock under employee plans - 47 - 68
Issuance (Payment) of commercial paper, net (100 ) (1 ) (100 ) 100
Net proceeds from debt 994 - 1,491 1,519
Repayments of debt - - (12 ) (223 )
Change in cash from financing activities 894 (1,374 ) 1,379 (987 )

Effect of exchange rate changes on cash and cash equivalents 129 7 91 16

Change in cash and cash equivalents 2,008 350 3,347 859

Cash and cash equivalents at beginning of period 9,691 8,273 8,352 7,764
Cash and cash equivalents at end of period $ 11,699 $ 8,623 $ 11,699 $ 8,623

Dell Inc., Round Rock
Media Contacts: 512-728-4100
Jess Blackburn, 512-728-8295
jess_blackburn@dell.com
or
David Frink, 512-728-2678
david_frink@dell.com
or
Investor Relations Contacts:
Robert Williams, 512-728-7570
robert_williams@dell.com
or
Shep Dunlap, 512-723-0341
shep_dunlap@dell.com

Copyright Business Wire 2009

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