Running Head: DELL, INC.

Dell, Inc. Case Study

Brian Euseary
BAM 479
Professor Harvel-Jenkins
November, 30 2015

DELL, INC.

COMPANY PROFILE
Dell was started in 1984 by Michael Dell while he was a student at the University of
Texas. The vision behind the creation of Dell came from Michael wanting to change the way
computers were sold. He saw the way other companies were operating and decided there could
be a better way. With this vision of a better way in mind Michael Dell decided to start a build-toorder company that allowed consumers to customize their computers to fit their personal needs.
What began as a young mans dream and an investment of $1,000 turned into a corporation
boasting multibillion dollar sales in just over a decade (David, 2012).
In addition to a full line of personal computers (including desktops, notebooks, laptops
and tablets), Dell sells peripherals, network servers, Ethernet switches, and data storage. Dell
also markets third-party hardware and software as well as other services including asset recovery,
finances and consulting (David, 2012). Dells products are offered in both standard and
customized formats, and Dell continues to pride itself on their build-to-order process which has
become their specialty and gives them a competitive advantage over rivals. Dells top selling
products selling product continues to be personal computers although is making strides in the
tablet market. As tablets continue to infringe on the PC market, Dell has responded by creating
the worlds thinnest tablet the Venue 8000 (powermore.dell.com, 2015). Dell serves all industries
and market segments with the top ten global airlines and seven out of ten pharmaceutical
companies all using Dell products as well s 90 million patients being served in Dell powered
hospitals (powermore.dell.com, 2015).
Dell works with all sizes of companies from major corporations to ten million small
businesses, and also has provided 300 million dollars in capital for entrepreneurs and tech
startups (powermore.dell.com, 2015). Dell operates on a global scale and as of last year were the
third largest PC vendor in the world and the number one PC monitor shipper in the world.
(dell.com, 2015; Wikipedia.com, 2015). Both 98% of Fortune 500 companies use Dell and 90%

DELL, INC.

of Fortune 1000 use Dell software. Although Dells focus is largely concentrated on corporate
PCs versus consumers, Dell still serves several different types of customers including working
mothers which won Dell the Working Mother Award, and 6.8 million students in 295, 000 classes
(David, 2012; powermore.dell.com, 2015). Dell is currently the leading provider in cloud
software (powermore.dell.com, 2015), making Dell extremely valuable to their customers these
days when security and storage are of the utmost importance. Currently Dell holds over 7,800
patents showing that Dell is now trying to exhibit more innovation than in 2011 when that
number was a mere 2,991 (David, 2012; powermore.com, 2015).
In the course of Dells existence several alliances have been formed to allow further
increased customer satisfaction. Some of these business allies include Intel, Microsoft, Oracle
and SAP. All of these companies offer a variety of services to help differentiate Dell from the
competition. Every member of Dells Excellence Team possesses both the educational and
employment backgrounds necessary to provide Dell an advantage now that they are on Dells
team. The current leadership team is in place after declining sales and falling revenues. However
in recent years Dell has managed to turn things around and receive many accolades including but
not limited to (powermore.com, 2015).

Being ranked #1 company in Security 500

Leader in virtualized data centers
Data center product of the year
# 1 storage capacity worldwide

Dell has managed to maintain the principal competitive advantage that has been there
from the start thanks to never letting go of the direct-to-consumer sales method. Further
competitive advantages came with Dells acquisitions that grant Dell further diversification
opportunities that werent possible five years ago. Since Dells inception in 1984 there have been
much success and times when things werent always looking the best. Despite those trying times,

DELL, INC.

Dell has still managed to be named most ethical company two years in a row, is the leading
technology company in recycling and founder Michael Dell was named the first Global
Advocate, Entrepreneurship (powermore.dell.com, 2015). As long as Dell continues with what
they know best and work hard at being the best in innovation, the future for Dell looks bright.
DELL MILESTONES

1984 As a pre-med freshman at the University of Texas at Austin, Michael starts a new

computer business under the name of PC's Limited.

1985 We design and build our first computer system, the Turbo PC, featuring an Intel
8088 processor running at 8MHz, a 10MB hard drive and a 5.25" floppy drive. We
establish customer experience as a Dell differentiator with risk-free returns and next-day,

at-home product assistance, among the first in our industry.

1989 Dell joins the mobile computing revolution with its first laptop computer, the

316LT.
1992 Dell debuts on the Fortune 500. Michael becomes the youngest CEO to lead a

company that receives this honor.

1996 Dell.com launches, generating $1 million in sales per day just six months after the

site went live.

1999 By the end of the year, Dell is ranked No. 1 in PCs in the U.S., No. 1 worldwide in

PCs for large and medium businesses and No. 1 in worldwide workstation shipments.
2000 Internet sales on dell.com reach $40 million a day, making it one of the highest-

volume ecommerce sites in the world.

2001 It's a year of firsts as Dell becomes the No. 1 computer systems provider

worldwide, and reaches No. 1 in U.S. Intel-based server shipments.

2006 We revolutionize the way businesses connect with customers with the launch of
Direct2Dell a blog to enable fast, direct, two-way conversations with our customers.
We acquire computer gaming leader Alienware to complement our high-performance
systems designed for gaming enthusiasts and media content customers.

DELL, INC.

2008 We debut the Dell Latitude E-family laptops, redefining on-the-go business
computing with breakthrough battery life and design improvements driven by end-user

input.
2009 Dell enters the smart phone market with the Mini 3i from China Mobile. Customers
rank Dell x86 servers, corporate laptops and desktops No. 1 in enterprise customer

satisfaction.
2010 Dell acquires key IP in storage, systems management, cloud computing and
software: Boomi, Exanet, InSite One, KACE, Ocarina Networks, Scalent and
Dell Compellent. Dell enters the tablet arena with the Streak, a 5-inch device designed
to provide the best on-the-go entertainment, social connection and navigation experience.

Newsweek names Dell the greenest company in America.

2013 Michael Dell and private equity firm Silver Lake Partners buy back Dell from
public shareholders to accelerate our solutions strategy and to focus on the innovations
and long-term investments with the most customer value.

CASE STATEMENT
Dell Inc. is currently faced with an increasingly competitive industry as more and more
Asian competitors are entering the market. This increased competition is coming at the worst
possible time as the PC industry is suffering as a whole right now. PC sales are continuously
dropping as consumers are beginning to find more substitute goods to replace the PC. These
substitute goods include tablets and smartphones that are not only just as efficient as PCs in
many aspects but also more lightweight and portable. These obstacles have and will continue to
affect Dells profits if some major decisions arent made by senior management that include the
formulation, implementation and evaluation of new strategies to combat the challenges Dell is
presently struggling against.

DELL, INC.

MISSION STATEMENT EVALUATION

Dells vision statement is Its the way we do business. Its the way we interpret the
world around us our customer needs, the future of technology, and the global business climate.
Whatever changes the future may bring, our vision Dell vision will be our guiding force
(David, 2012).
The vision statement is not successful. It is very vague, and doesnt mention the industry
Dell belongs in. More importantly, the statement does not even begin to answer what do we
want to become. Also the statement is entirely too long. As opposed to most vision statements
which are generally one sentence, this one is three sentences. Unfortunately; even at an excessive
length the statement still doesnt answer the most important question, or tell much about Dell at
all.
Dells mission statement is Dells mission is to be the most successful computer
company in the world at delivering the best customer experience in markets we serve. In doing
so, Dell will meet customer expectations of highest quality; leading technology; competitive
pricing; individual and customer accountability; best-in-class service and support; flexible
customization capability; superior corporate citizenship; financial stability (David, 2012).
Table 1. Mission Statement Evaluation Matrix
Company

Dell, Inc.

Customers

YES

Products

Markets

Technology

Concern for

or

Survival,

Services

Growth and

YES

YES

YES

Profitability
YES

Philosophy

Self-

Concern

Concept

for
Public

YES

YES

This is a great mission statement because it incorporates eight of the nine components of
a successful mission statement. Having a good mission statement is important because
oftentimes this is what the public sees and how they make the choice to do business with a

Image
YES

DELL, INC.

particular company. The one component missing from the Dell mission statement is Concern for
Employees. This is not something that the public is usually very concerned with, but it is very
important to the employees of Dell. That being said, on further analysis of Dells website it is
obvious that Dell cares a great deal about their employees even if it is not stated directly in the
mission statement.
Despite the exclusion of the concern for employees component Dell does a good job in
every other aspect of their mission statement. The very first sentence of the statement mentions
product/services, markets and customers. As the mission statement continues, it points out all of
the remaining five components and how it plans to be the best in incorporating each component
into their day to day operations. Best-in-class service and support as well as flexible
customization capacity are indicative of the self-concept component, while competitive
pricing; individual and company accountability are examples Dells philosophy. Concern for
survival, growth and profitability is acknowledged with financial stability. The technology
component is almost self-explanatory with the phrase leading technology, and lastly superior
corporate citizenship exhibits Dells concern for public image. Everything about Dells
mission statement says that they are fully committed to not only Dell itself, but its customers, the
public at large, its stakeholders, and the environment.
Overall, based on Table 1 and the evaluation of both the vision and mission statements,
several conclusions can be drawn. The first one being that Dells vision statement needs
restructuring. Not only is it vague and drawn out, but it also fail to give any insight as to what
Dell is all about and what they want to become. The mission statement however, is much more
effective in stating Dells goals and objectives, as well as how both will be accomplished. As
long as Dell can continue to follow the mission statement that they have assigned themselves and

DELL, INC.

defines a better vision of the company they are and want to become they will have continued
success.
FINANCIAL ANALYSIS
Careful examination of Dells financial statements reveals some very pertinent
information. Between the years of 2001-2009 Dell experienced steady increases in net revenues.
These revenues ranged from over $31 billion to just upwards of $61 billion (i.dell.com, 2015).
Beginning in 2010, these revenues began what can only be described as a sharp decline. From
fiscal year ending January 2010 to quarter 2 of 2014 that same number ranged from just under
$53 billion to a bit over 14 and a half billion dollars (i.dell.com, 2015). With the exception of
maybe one or two years, the same pattern of steady increases and then a sharp decline can be
seen when analyzing gross margins, operating incomes, and net incomes for the same years
(i.dell.com, 2015). The financial ratios derived from the second quarters of 2013 and 2014 alone
are enough to prove that Dell is in desperate need of strategies that could possibly turn what is
now a bleak present into a brighter future.
Table 6: Analysis of Financial Ratios

Financial Strengths and Weaknesses

Based on the information compiled in Table 6, it is clear that Dell is performing well
below the industry average for at least the last two fiscal years. Every ratio presented in the table

DELL, INC.

is far from what the industry is which further illustrates how poorly Dell is performing and why
new strategies are needed. The only ratio that proves Dell is not in a complete downward spiral is
the Quick Ratio. In the second quarters of both the 2013 and 2014, the Quick Ratio of Dell Inc.
was higher than that of the industry average.
There can be many explanations for why Dell performed so poorly in these two years as
there were many obstacles that Dell was facing then as well as now. In terms of Debt to Equity
Ratio, it was previously mentioned that Dell was over $5 Billion in debt in 2011 and had a much
higher long-term debt/capital ratio than any of the other competing PC firms. That being said this
high ratio comes as no surprise. All of the lower profit margin ratios can be traced back to the
increased competition and falling sales that the PC industry is facing as a whole. Return on
Equity declines can be a combination of both falling sales and the amount of debt Dell is
currently carrying. This is because it is virtually impossible to bring revenues back into the
company when the bulk of these revenues need to go towards paying off long term debts.
When looking at assets, Dells Asset Turnover ratio did not decrease between 2013 and
2014, but it is still just a bit over one-third of what the industry average is. This is yet another
that suffers when sales are falling. Dell should not have had any increase in assets as long as
sales were declining. On a positive note for Dell the Return on Assets was more than two and a
half times better in 2014 than it was in 2013. This means that more money was earned on fewer
investments that year. Unfortunately neither number comes close to the industry average for this
ratio. Most surprising is Dells poor Inventory Turnover ratio compared to the industry average.
Dells direct to customer sales method suggests a better inventory turnover ratio should be
guaranteed, but this has not been the case in recent years.
Raising Short-Term Capital
Based on Dells credit ratings from all three ratings agencies (Standards & Poors,
Moodys, and Fitch), Dell received a positive to stable outlook. Dells ratings class ranges from

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B23 to BBB as recently as December 2014 (dell.com, 2015). These ratings may not be the best
but none of them are cause for high speculation. Furthermore Dell has a quick ratio higher than
the industry average illustrating that if necessary Dell has assets that can be converted to cash to
cover short term debts if necessary.
Raising Long-Term Capital
At this point it would not be fairly difficult for Dell to raise long term capital, but based
on Dells current situation it wouldnt be very wise to attempt to do so. Dell is now privately
held, so the option of selling stock does not exist. Dell could possibly take on more debt to raise
long term capital, but based on the amount of debt Dell is currently carrying this may not be the
best decision if it is not absolutely necessary.
Sufficient Working Capital
In 2014 Dell had a working capital of $411 billion. This was a twenty-five percent
decrease from the 2013 working capital of $654 billion. However both years working capital
amounts show that Dell has no problem paying off all current debt with current assets.
Effective Capital Budgeting
Dell has not shown effective capital budgeting practices in recent years. Judging by the
ratios displayed in Table 6, Dell is not performing nearly as well as the industry average in any of
the financial areas analyzed. The only ratio that isnt lower than the average is the quick ratio.
This shows that Dell is doing sufficiently well for the short term, but not the long term. This data
shows poor capital budgeting practices.
Dividend Payout Policies/Investor & Stockholder Relations
Dell is a privately held corporation and therefore does not have any current dividend
payout policies. Furthermore there are currently no investors or stockholders with whom to hold
steady relationships with.
Dells Financial Managers
Dell has an extremely educated and well trained group of managers that are all more than
qualified to do their jobs effectively. Chairman and CEO Michael Dell founded Dell and has
been there since 1984. Dells Chief Financial Officer and senior vice president Thomas Sweet

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has been with Dell for eighteen years now. Before his current position Mr. Sweet held many
other finance oriented positions within Dell Inc. Prior to joining Dell, Mr. Sweet worked for both
Telos Corporation and Price Waterhouse in finance as well. He is a Certified Public Accountant
and has a bachelors degree from Western Michigan University in Business Administration
(dell.com). All of Dells other senior vice presidents have a minimum of twenty years work
experience in their respective areas of expertise, and at least fifteen years with the company.
Table 2. External Factor Evaluation Matrix
Weight

Rating

Weighted

Key External Factors

Score
Opportunities
1. PC sales to foreign markets projected to

0.08

0.24

2. Consumer demand for software and

0.09

0.27

hardware projected to grow.

3. Consumers continued appeal for custom

0.08

0.32

0.09

0.24

5. Increased corporate demand for PCs

0.12

0.36

6. Low costs and risks of introducing new

0.08

0.16

0.05

0.10

grow 19-32%.

built computers.
4. Online stores versus retail
establishments provide convenience to
customers.

products.
7.

Lower market entry costs

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Threats
1. Asian competition impacting prices

0.06

0.24

2. Prices for desktops and PCs declining

0.08

0.24

3. U.S. and Western Europe markets

0.07

0.28

0.04

0.08

0.06

0.24

6. Heavy reliance on outside

0.03

0.06

manufacturers
7. The growth rate of the computer

0.04

0.12

0.03

0.03

heavily saturated
4. Easy entry into the market poses
potential threats.
5. Tablet sales continues infringe on PC
market.

industry is slowing down.

8. Fewer patents owned than #1 competitor
HP.

TOTAL

1.00

2.98

Dells high scoring opportunities involve either consumer demand (both individual and
corporate), or market projections. The increased corporate demand for PCs is a major
opportunity for Dell because Dell has a focus on corporate consumers. While the consumer PC
industry was experiencing falling sales, Dell still managed to have increased revenues due to
80% of revenues coming directly from corporate and government customers (David, 2012). The
projected growth in both PC sales in foreign markets and demand for software and hardware are
opportunities for Dell to broaden the global enterprise as well as increase revenues. The

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increased demand for hardware and software come partially from the corporate customers as
well as these customers are looking to update aging or obsolete equipment after the recession.
The projected growth rate was 15% for 2011 meaning that here is room to grow. As the demand
for hardware and software continues to grow Dell can take full advantage of other services and
diversify further through the use of Dell Services and Dell Storage (David, 2012). Projected
sales to the Asia/Pacific and the Middle East markets were expected to grow 32% and 19%
respectively in 2011 giving Dell an opportunity to capitalize on new and emerging markets
(David, 2012).
Dells high scoring threats involve the PC market and Dells position in that market.
Competition, prices and growth rates are all factors in how the market can fluctuate. These
external factors can change quickly and therefore need to be closely monitored at all times.
Based on Dell having a total weighted score of 2.98 on the EFE shows that Dell is managing to
do well in taking advantage of the opportunities that are presented as well avoiding the
environmental threats they encounter.
Table 3. Internal Factor Evaluation Matrix
Key Internal Factors

Weight

Rating

Weighted
Score

1. Dell is the largest PC maker in the world.

0.07

.21

2. Worldwide brand recognition

0.09

.36

3. Lower operating costs than competitors

0.08

.24

4. Direct to customer sales approach provides

0.10

.30

better customer relationships.

5. Lower inventory costs

0.08

.32

6. Better inventory turnover ratios

0.07

.21

7. Acquisition of Perot and Boomi to broaden

0.05

.20

Strengths

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Dells focus on offering new products and

services.
8. Direct to customers approach provides

0.07

.14

1. Higher production costs than competitors

0.07

0.14

2. Over $5billion in debt in 2011

0.08

0.16

3. Higher long-term debt/capital ratio than

0.06

0.18

industry average in 2011

4. More competition and lower profit margins as

0.04

0.12

a late mover
5. Relationships with retailers not as established

0.05

0.15

as those of competitors
6. Forced outsourcing to remain competitive

0.04

0.08

7. Repeated structural changes in the past without

0.05

0.15

competitive advantage over rivals.

Weaknesses

clear direction
TOTAL

1.00

2.96

Some of Dells highest scoring strengths include being the largest PC maker company in
the world; having worldwide brand recognition and lower operating costs than the competition.
These factors are behind what has made Dell an overall success since Dells inception in 1984.
That being said there is another strength Dell possesses that is even more important than all of
these and that is Dells Direct-to-Customer sales method. This one factor helps lower inventory
costs as well as produce higher inventory turnovers. Most importantly of all this sales method

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provides Dell a competitive advantage over rival PC companies. Unfortunately as time goes by
and the industry changes the advantage that Dell has enjoyed for almost 30 years could be
slipping away, and Dell has to change with the times to continue to compete with HP, IBM and
all of the other competitors in the industry (David, 2012). Luckily Dell has made recent
acquisitions that can make transitioning from a simple computer manufacturer into a fully
fledged provider in all technological services (David, 2012).
Unfortunately, Dells highest scoring weaknesses all center around finances. In 2011 Dell
was over $5 billion in debt which is a major concern. This number is 14 times the amount that
was reported in 2008 as Dell battles to compete with other leaders in the PC industry (David,
2012). Another worry would be that in that same year at 39.9% Dell had a higher long term debt
to capital ratio than what is the average for the PC industry and higher production costs than rival
companies as well (David, 2012). These types of financial weaknesses combined with other
weaknesses in the market could be a signal that Dell may not be in a good overall position.
However, Dell having a total weighted score of 2.96 shows that despite these key weaknesses
and because of these strengths Dell is still managing to do very well in the PC industry.
INDUSTRY ANALYSIS
Porters Five Forces Model of Competition is used to determine Dell Incs competitive
position in the personal computer industry. This model evaluates five different areas of the
industry and how each of them will affect Dell Inc. The forces to be evaluated are as follows:
1.
2.
3.
4.
5.

Rivalry among competing firms

Potential entry of new competitors
Potential development of substitute products
Bargaining power of suppliers
Bargaining power of consumers (David, 2012).

Each one of the forces listed is significant and can be crucial to the continued survival of Dell.
Therefore it is imperative that they are thoroughly analyzed to ensure that they are all addressed
properly.

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Rivalry Among Competing Firms

The PC industry is extremely competitive both here in the United States as well as
worldwide. In the U.S., Dells biggest competition comes from Hewlett-Packard, Acer, Apple
and Toshiba (David, 2012). However, when looking at the world market; it should be noted that
other competitors such as the Asian companies Asus and Lenovo are also forces to be with
(David, 2012). As computer prices continue to decline; price competition becomes a major factor
(David, 2012). Therefore, Dell and all of these major companies and some minor ones are all
competing to come up with the best possible product at the lowest possible price to attract the
most consumers.
Each company approaches the competition in different ways as each individual company
has different specialties and strengths. One of Dells major strengths is in the area of distribution,
so this is where Dell focuses the most energy (Rizal, 2015). Companies like IBM and Apple are
stronger in the innovation area and therefore focus more energy there (Rizal, 2015). Based on
Dells strengths and competitive advantages Dell was ranked second in the United States but
third in the world (David, 2012). However, recent Dell acquisitions offer chances for
diversification and more innovation which can result in higher profits if Dell takes full advantage
of the opportunities gained. Every company in the computer industry is now and will most likely
remain a highly competitive industry and any strategies formulated should be conscious of that
fact.
Potential Entry of New Competitors
The potential entry of new competitors is not something Dell really has to worry too
much about. As of 2013 Dell and four major competitors hold the majority of the market share in
the PC industry worldwide (Jones, 2013). A new competitor entering the market would be
automatically at a disadvantage due to a lack of knowledge about the industry. That lack of
knowledge would require more capital spent on research and development that the new entry

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would not originally have readily available (Rizal, 2015). Another disadvantage for new entrants
would be the smaller production size which is directly correlated to higher priced products. High
prices are not good for a new company starting out because prices are a major concern for
consumers when looking to purchase new products (Rizal, 2015). The previously mentioned
barriers paired with a lack of innovation and brand recognition can be the final downfall of a new
market entrant assuring Dell and the other current competitors will not have much trouble from
new entries.
Potential Development of Substitute Products
The potential development of substitute products is a major threat to Dell and the entire
PC industry. As tablet sales continue to grow it is clear that they will be the newest trend and
therefore a threat to everything the PC industry is (David, 2012). Todays consumers like tablets
and according to Gartner will now be using tablets and other mobile PC alternatives as their
primary mobile device, therefore cutting into the PC industry (Savitz, 2011). In fact, the
expected growth rate for home PCs is expected to be less than 10 percent annual growth in
mature markets from 2011 through 2015 (Savitz, 2011). Although corporate demand for PCs is
expected to grow, even the professional market considers tablets to be a substitute for traditional
PCs (Savitz, 2011).
Besides the tablet, the PC industry has yet another enemy in the smartphone. As the
world continues to evolve more and more individuals use their phones as substitutes for
everything including watches and PCs. The public likes having their computer readily available
right in their pocket (Rogowsky, 2013). Both the tablet and the smartphone will continue to have
a major impact on the PC industry, so Dell will have to continue to try to bring more innovation
to their product if they expect to compete. Forecasts show that up to 87% of the sales market of
connected devices will be comprised of tablets and smartphones by the year 2017 (Rizal, 2015).
Dell has already tried to gain ground in the tablet market with the development of the worlds

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thinnest tablet in 2014, but whether or not that will be enough in the long run remains to be seen
(powermore.com, 2015). The graph below does not predict a positive outlook for the PC market:
Table 5.

(Lomas, 2013).
Bargaining Power of Suppliers
Bargaining power of suppliers is somewhat of a two-sided coin in regards to the PC
industry. Most if not all computer companies use different suppliers for different things and Dell

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is no different. The categories of suppliers used in the PC industry are hardware suppliers,
software suppliers and service suppliers (Rizal, 2015). Some of Dells suppliers hold more
bargaining power than others. For example software suppliers such as Microsoft and Intel are
both at the top of the operating system and microprocessor industries respectively. This means
that no matter what, Dell and the other competitors in the PC industry have to stick with them if
they want to produce the best products; which denotes that these companies have high bargaining
power (Carpenter, Fink, Harris, Jacobsen, & Moore, 2008). On the other side of the coin there
are the hardware suppliers of raw materials like keyboards, speakers, screens etc., that produce
products that are no different from any other manufacturer of the same products. Therefore
without any product differentiation Dell would be free to switch to another supplier if the
supplier they were using decided to raise the price of their goods signifying the low bargaining
power that they possess. (Carpenter et al., 2008). Service suppliers offer various services
including tech support, repair services and internet (Rizal, 2015), and fall somewhere in the
middle between high and low bargaining power. Overall it is difficult to determine the exact
level of the bargaining power of suppliers because there are different levels.
Bargaining Power of Consumers
The PC industry and many other industries are highly influenced by the bargaining power
of consumers. Without consumers there are no profits, and without profits there are no
companies. As noted when discussing the rivalry between competing firms price competition in
the computer industry has become a major factor in the industry (David, 2012). Furthermore with
the availability of substitute products like tablets and smartphones, there are more alternatives to
the personal computer than ever (Rizal, 2015). Both of these points weigh heavily on the
bargaining power of consumers as consumers are paying more attention to pricing than ever and
tend to purchase the products with the lowest prices because of the similarities of the products

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(Carpenter et al., 2008). Also when there are substitute products available possessing the same
capabilities such as smartphones, there is a chance the consumer would be more likely to
purchase that product instead (Rizal, 2015).
The preceding information is mostly based on consumers purchasing computers for their
homes and/or offices. Unfortunately when it comes to the PC industry and specifically Dell there
is another consumer type to consider, and that is the corporate consumer. Dell has always
focused a lot on corporate consumers which is important because while the consumer market is
declining, the corporate market is still growing. In fact corporate and governmental consumers
make up about 80% of the PC revenues Dell receives (David, 2012). Because of the larger
volume of the purchases that corporate consumers make, they will have a larger bargaining
power than an individual consumer.
There is one thing that Dell has that is a major benefit, and that is the competitive
advantage brought by the direct model concept that Dell has maintained from the very beginning.
Dells direct model concept cuts out the middle man and allows consumers to make their
purchases directly from Dell resulting in lower production costs (Rizal, 2015). Another benefit of
the direct model concept is the ability for consumers to customize their computers to their own
specific needs. As with the bargaining power of suppliers, the ultimate bargaining power of
consumers varies according to the specific consumer.
SWOT ANALYSIS
Dells strengths lie in the size of the company itself (Dell is the largest PC company in
the world), global brand recognition, and the close relationship Dell share with customers. Other
beneficial strengths Dell enjoys are low inventory costs and high inventory turnover ratios. Both
of the aforementioned strengths as well as Dells competitive advantage over rivals all stem from
the direct-to-consumer sales method that Dell has practiced since being founded in 1984. Dells
weaknesses should be noted as well, the three largest of which all involve financial difficulties.

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During fiscal year 2011 Dell was over five billion dollars in debt and had a significantly higher
long-term debt/capital ratio than what was the industry average at the time (David, 2012). Factor
in Dells higher production costs than competitors and it is clear that Dell was in dire need of
new strategies and objectives.
Opportunities for Dell include both the convenience that consumers experience by being
able to shop online for all of Dells products and services and how much Dells custom built
computers appeal to their customers. The increased corporate demand for PCs in a market where
PC sales are continuing to decrease is another major opportunity for Dell. Projected growth in
both foreign markets and hardware/software demand can also prove to be strong opportunities
for Dell. A major potential threat to Dell is the slowing growth rate of the consumer industry.
Heavy saturation of U.S. and Western European markets paired with Asian competition
impacting prices also pose potential threats as do tablet sale continuing to infringe on the PC
market. Lastly, Dell owns a fraction of the number of patents their largest competitor HewlettPackard owns which is also a threat that could possibly be detrimental.
Based on the analysis of Dells strengths, weaknesses, opportunities, and threats it seems
that a SWOT Matrix could point out several strategies that could benefit Dell moving forward.
Pairing the opposing factors from both the IFE and the EFE matrices together to come up with
new objectives is a logical step in strategy formulation and will be the first step in finding what
strategies will work best for Dell.
MATCHING STRATEGY TO INTERNAL AND EXTERNAL CONDITIONS
Table 4. SWOT Matrix
Strengths
1. Largest PC company in

Weaknesses
1. Higher production costs

the world.
2. Worldwide brand

than competitors.
2. Over $5 billion of debt

recognition.
3. Lower operating costs

in 2011.
3. Higher long-term

DELL, INC.
than competitors.
4. Better customer

22
debt/capital ratio than
industry average in

relationships.
5. Lower inventory costs
6. Better inventory
turnover ratios.
7. Acquisition of Perot
and Boomi to broaden
focus and allow for
more diversification.
8. Competitive advantage

2011.
4. More competition and
lower profit margins as
a late mover.
5. No established retailer
relationships.
6. Forced outsourcing to
remain competitive.
7. Repeated structural

over rivals.
changes with no clear
Opportunities
1. PC sales to foreign
markets projected to
grow 19-32%.
2. Demand for

strategy.
SO Strategies
WO Strategies
1. Establish more business
1. Begin advertising
outlets in foreign
markets. (S1, S2, O1,).
2. Improve online stores

online specials to
increase revenues to
combat high production

hardware/software

for more customer

costs. (W1, W2, W3,

projected to grow.
3. Custom built computers

convenience and to
further increase

appeal to customers.
4. Customer convenience
offered by online stores
vs. retail.
5. Increased corporate

customer relationships.
(S4, O3, O4).
3. Capitalize on the

O4).
2. Contract with retailers
i.e. Wal-Mart, Target,
Best Buy to increase
sales and establish

increased corporate
better retail

demand for PCs.

6. Low costs and risks of

demand for PCs. (S3,

relationships. (W5, O1,
S8, O5).

introducing new

O2, O5).

DELL, INC.
products.
7. Lower market entry

23
3. Utilize outsourced
manufacturers to

costs as a late mover.

produce more products
to pick up foreign sales.
(W6, O1).
4. Become a first
responder to the
increased demand for
hardware and software.
Threats
1. Asian competition
impacting prices.
2. Prices for desktops and
PCs declining.
3. U.S. and Western

ST Strategies
1. Expand business
practices out of

tablet devices and

oversaturated markets.

software first. (W4, T5,

(S1, S2, T3).

2. Use new acquisitions to

European markets
develop new products
saturated.
4. Easy entry into the
market poses threats.
5. Tablet sales continue to
cut into the PC market.
6. Heavy reliance on

and services. (S7, T7,

T8).
3. Reduce outside
manufacturer reliance
by building small

outside manufacturers.
7. The growth rate of the
computer industry is
slowing down.
8. Fewer patents owned

(W4, O2).
WT Strategies
1. Work to develop new

company owned
factories. (S5, S6, T6).

T8,)

DELL, INC.

24

than #1 rival Hewlett

Packard.

The SWOT Matrix was chosen as the matching technique for Dell, Inc. because it gives
Dell a number of different strategies to choose from before deciding which work best and should
be implemented. A total of eleven strategies were found for Dell Inc. All of the different
strategies were based on the strengths, weaknesses, opportunities and threats that were
discovered after the completion of the IFE and EFE matrices. Out of the four strategy cells (SO,
WO, ST and WT) in the SWOT matrix, the Weaknesses/Opportunities cells produced the most
possible strategies; and the Weaknesses/Threats produced the least. Dell Inc. is now able to
review all of the strategies produced by the SWOT matrix and decide which (if any) of these
strategies should move forward to the next phase of strategic management: strategy
implementation.
SO Strategies
The SO strategies produced include using the worldwide brand recognition that Dell
possesses to establish more retail outlets in foreign markets as PC sales to foreign markets are
projected to grow. Another SO strategy is to improve online stores for increased convenience and

DELL, INC.

25

better relationships with customers. Lastly it is important that Dell makes the most of the
competitive advantage enjoyed by Dell to meet the increased corporate demand for PCs.
WO Strategies
The WO strategy cell includes advertising online specials to customers to increase
revenues to counter production costs. Another WO strategy is contracting with big name retailers
(i.e. Wal-Mart, Target, Best Buy) to increase sales by reaching consumers who prefer traditional
shopping to online, and to establish better retail relationships. The outsourced manufacturers can
be used to produce more products in foreign markets as these markets are projected to grow. The
last WO strategy of note is to become a first responder to the increased demand for hardware and
software as this will increase profit margins and reduce initial competition.
ST and WT Strategies
There werent as many strategies produced in the ST and WT cells as there were with the
SO and WO cell, but there are still some that should be noted. One of the ST strategies is to use
brand recognition to expand outside of oversaturated U.S. and Western European markets.
Another possibly effective strategy includes using new acquisitions to not only diversify, but to
also develop new products and services to increase the number of patents held. Lastly Dell could
possibly reduce outside manufacturer reliance by building small company owned factories. The
only strategy in the WT cell is to work to develop new tablet devices and software instead of
following the pack.
Not all of the strategies uncovered by the SWOT Matrix will be successful for multiple
reasons. Some reasons for these strategies not working could be finance related, others could be
faced with a timing issue; while some may just not be a good fit overall. What is most important
is that there were a number of strategies listed and some of them could possibly bring about the
effective changes that are necessary to move Dell forward in a positive direction. Unfortunately,
more analysis will be needed before Dell can make an informed decision as to which strategies
work best.

DELL, INC.

26

The following table will look at three different strategies derived from the SWOT Matrix
and evaluate which if any strategy would be best for Dell at this time. These strategies were each
chosen for different reasons, but they were all chosen because of the belief that they are the best
possible strategies to possibly turn Dell around. In constructing the QSPM matrix each strategy
was rated against all of the key factors that were discussed in both the IFE and the EFE matrices
to determine how well each could take advantage of strengths and gain the most from
opportunities while simultaneously avoiding threats and improving weaknesses. This table will
be ultimate decision making tool in deciding which strategy will best serve Dell Inc. in the near
future.
Table 6 QSPM Matrix

DELL, INC.

RECOMMENDED SOLUTION

27

DELL, INC.

28

Dells long term objectives should be focused on increasing sales and profits while
reducing present long term debts. The strategies formulated must have some clear direction in
how Dell plans to move forward to be sure that these objectives can be met. Dell is operating in
an extremely competitive industry where declining sales and falling profits are becoming the
norm and therefore needs to ensure that any future strategies will be instrumental in turning
things around at least from a financial standpoint. Any strategies that are not related to financial
improvements are not congruent with long term objectives, and thus should not be looked into at
this time. The most efficient way to do this is to make sure that everyone in every department of
the company is operating under the same set of established priorities.
The current PC market is not even close to as stable as it once was, and Dell needs to find
new ways to increase profits as quickly as possible. Dell has a competitive advantage due to the
direct to customer sales method that has been in use since 1984, but with sales down industry
wide this competitive advantage is not what it used to be. With increased competition and
oversaturated markets it is imperative that decisions are made in hopes of revitalizing Dells
continuously falling revenues and profits. This means that Dell could adopt a Cost Leadershipbest value strategy and be extremely successful if they are able to offer products that can
compete with other similar products on the market. An alternative strategy would be a
Differentiation strategy, but that would only be effective if Dell is able to come up with a product
that no other competitor has already come up with. Unfortunately there is not much innovation in
the computer industry as competition increases (David, 2012). Dell has been known to be a late
mover in terms of new product and services for years, but if Dell hopes to get ahead of
competitors and encourage consumers to purchase more products. Dell should
Three long term strategies have been selected that Dell could possibly choose to follow in
hopes of turning things around. They are using new acquisitions to develop new products, more

DELL, INC.

29

business outlets in foreign markets, and reduce reliance on outside manufacturers by building
company owned factories.
The first strategy involves using new acquisition to develop new software and hardware
products that can compete with existing products in the market as well as innovate the market
itself. This strategy focuses on product development and could be extremely beneficial to Dell.
For this strategy to be successful Dell would have to utilize their R&D department to begin
looking into some new products through the use of focus groups and other research activities to
find what new products consumers are looking for. Once Dell has some idea of what consumers
want they will need to begin work on developing these products. There will be larger R&D costs
than Dell is used to if this is the plan that is chosen, but as Dell generally much less than the two
main competitors (dell.com, 2015), this may be the right time to spend a little more money in
that area. Dell has sufficient working capital to invest the extra money in R&D if necessary and
the benefits will be worth it.
The second strategy involves establishing more business in foreign markets. This strategy
focuses on market development could possibly be a major accomplishment for Dell because the
US and Western European markets are oversaturated at the moment. Unfortunately this strategy
would require a lot of capital financing to build the factories as well as purchase all of the
equipment. This strategy could prove to be more costly than the others, and when the objective is
to reduce debt could be a big mistake.
The third strategy involves reducing reliance on outside manufacturers and building
company owned factories instead. This strategy focuses on backward integration. The strategy
will have some of the same cons that the second strategy faces in requiring large capital
expenditures before ever possibly beginning to produce a profit.
As of right now based on the information found in the QSPM as well the financial
analyses, the best possible option for Dell would be strategy one. This is the only strategy that

DELL, INC.

30

does not require large amounts of capital being invested. Furthermore Dell could benefit greatly
from finally being a first responder. If done properly Dell could possibly experience some of the
same success that Apple has with the development of the iPod, iPad and iPhone. The strategy
would require some additional R&D capital investment, but it would most likely require a
fraction of the amount of investment the other two strategies would require.
STRATEGY IMPLEMENTATION
To be successful in implementing this new strategy Dell is going to require the
cooperation and support of all management in every area of the company. This includes
marketing, research and development, and human resources but most importantly finance. While
every area will have to work hard the first area would have to be finance because without the
needed capital the strategy wont be effective. The duties of each department are broken down as
follows.
1. Finance
Raise capital to fund necessary research and development tasks
Utilize capital to achieve marketing tasks
Utilize capital to sell get new products to the public
2. Research and Development
Research new trends in hardware and software products
Research new services in cloud computing and data storage
Develop new services and products
3. Marketing
Market new products and services to public consumers
Market new products to corporate customers

4. Human Resources
Hire new employees to help assist in the research and development of new

products
Train existing employees on new practices
Reposition employees into new departments and areas when necessary

DELL, INC.

31

The strategy chosen for Dell to increase sales and profits is to develop new hardware and
software products offer new services through the use of recent corporate acquisitions. Perot
Systems will be a great asset in future services as the company is a leader in IT services in many
industries including healthcare and banking David, 2012). Dell can take advantage of this
already strong market position and become a first responder to increasing demand for IT
services. The acquisition of Boomi was also a good move for Dell because this company is a
leader in cloud computing. The use of cloud computing will continue to increase as the
technology market continues to expand. An article on infoworld.com considers the cloud to be
the new hardware as servers, storage and networking equipment are becoming more and more
linked (Knorr, 2013). Dell has already invested $1 billion to expand on the cloud computing
services that will increase the availability of virtualization for Dells corporate customers (David,
2012). These are both excellent examples of how new acquisitions can be beneficial for Dell in
the future while trying to increase sales and profits.
In addition to expanding into services, Dell also needs to become more innovative with
the products that are offered. As tablets and smartphones continue to intrude on computer
markets, new hardware and software development is essential. Dell needs to invest another
billion dollars in the Research and Development department to bring about new cutting edge
devices into the market. The funding for this strategy has to come from somewhere, and Dell
needs to look at ways to raise it. Unfortunately as the EBIT/EPS chart shown below depicts this
money would be most efficiently raised either through stock financing or a combination of 70%
stock and 30% debt.
Table 7 EBIT/EPS Chart
Common Stock Financing

Debt

DELL, INC.

EBIT
Interes
t
EBT

Normal

Boom

$
275,000,000

$
750,000,000

$
1,250,000,000

$
80,000,000
$
195,000,000

$
80,000,000
$
670,000,000

$
68,250,000
$
$
$
487,500,000 812,500,000 126,750,000
12,831,333, 12,831,333, 12,698,000,
333.33
333.33
000.00
0.03799
0.06332
0.00998

$
234,500,000
$
435,500,000
12,698,000,
000.00
0.03430

Normal

Boom

$
275,000,000
0

$
750,000,000
0

$
1,250,000,000
0

$
275,000,000

$
750,000,000

$
1,250,000,000

$
96,250,000

EAT

$
178,750,000
12,831,333,
333.33
0.01393

# of
shares
EPS

Financing
Recession

Recession

Taxes

$
262,500,000

70% Stock - 30% Debt

Recession
Normal
EBIT
Interes
t
EBT
Taxes
EAT
# of
shares
EPS

$
275,000,000

$
750,000,000

24,000,000
$
251,000,00
0
$
87,850,000

24,000,000
$
726,000,00
0
$
254,100,00
0
$
471,900,00
0
12,73
8,000,000
0.0370466
32

$
163,150,00
0
12,73
8,000,000
0.0128081
33

32

$
437,500,000

Boom
$
1,250,000,000
2
4,000,000
$
1,226,000,
000
$
429,
100,000
$
796,900,00
0
12,73
8,000,000
0.0625608
42

$
80,000,000
$
1,170,000,00
0
$
409,500,000
$
760,500,000
12,698,000,
000.00
0.05989

30% Stock - 70% Debt

Recession
Normal
$
275,000,000
5
6,000,000
$
219,000,00
0
$
76,650,000
$
142,350,00
0
12,791,33
3,333.33
0.0111286
29

Boom

$
750,000,000

$
1,250,000,000

5
6,000,000
$
694,000,00
0
$
242,900,00
0
$
451,100,00
0
12,791,3
33,333.33
0.03526606
6

56,000,000
$
1,194,000,0
00
$
417,900,00
0
$
776,100,00
0
12,791,3
33,333.33
0.06067389
4

Due to Dell no longer being publicly traded, stock financing is not an option for the
company and therefore debt financing is the only option for Dell. Because of Dells current
financial situation it has been decided that debt financing is not the best option and instead the
money should be raised internally. While Dell does have the $1 billion in retained earnings to

DELL, INC.

33

pull out such a large amount at one time could be risky as there is no guarantee when the new
products will be available or what the expected revenues will be. A better suggestion for raising
the capital would be instead to sell off $1 billion in accounts receivables to help finance the
strategy. This would impact the balance sheet as a reduction in assets, but wouldnt affect the net
income bottom line. As revenues from new hardware and software begin to come in Dells
accounts receivables are sure to begin to increase as well.
The future of the technology in industry will be in the hands of software engineers who
can develop the best products for the lowest prices. Memory and storage devices are going to be
a big deal in both hardware and software and Dell has the ability to capitalize on this trend
(Knorr, 2013). Another area Dell can focus on is big data and how data is being stored. Dell can
follow IBMs lead with their Smart Analytics cloud and begin offering full Big Data services.
Taking further steps in Big Data will require Dell to not only invest in warehouses and silos, but
will also require training of existing employees or hiring of new employees who have the
necessary skills and education to embark on this new endeavor (Hinchcliffe, 2011).
Projected financial statements will show that while the first year after Dell implements this new
strategy will result in a negative net income sales and profits will rise thirty five percent, but
liabilities and assets were not changed too drastically.

DELL, INC.

34

DELL, INC.

35

CONCLUSION
Dell needs to increase revenues and decrease liabilities. As the computer industry
continues to change Dell has to make some decisions that will allow them to do these things
effectively. With emerging trends and recent acquisitions Dell has the opportunities to do just
that. Human resources managers need to hire new people who are experts in upcoming trends
and train employees accordingly. With a successful financing plan in place after selling off $1
billion in accounts receivable at a discounted price of 750 million; research and development
managers can begin researching innovative new hardware and software offerings and developing

DELL, INC.

36

them in a cost effective manner to maximize profits. Finally, the marketing team then needs to
market new products and services to appeal to both corporate and private consumers. If all
members of the team cooperate and work together they can be successful in implementing the
new strategy.

References
Carpenter, C., Fink, C., Harris, P., Jacobsen, J., Moore, C., (2008). Dell, Inc. Retrieved from
http://mmoore.ba.ttu.edu/ValuationReports/Spring2008/Dell-Spring2008.pdf
Csimarket, (2015). Computer Hardware Industry. Retrieved from
http://csimarket.com/Industry/industry_dividends.php?ind=1002
David, F. (2012). Strategic Management Concepts & Cases A Competitive Advantage Approach.
(14th ed.). Boston: Pearson
Dell Inc., (2015). Company Information. Retrieved from
http://www.dell.com/learn/us/en/uscorp1/birth-of-company?
c=us&l=en&s=corp&cs=uscorp1
Dell Inc., (2015). Dell Inc. 2015Annual Report to Customers. Retrieved from
https://powermore.dell.com/arc/#

DELL, INC.

37

Dell Inc., (2015). Global Alliances and Partners. Retrieved from

http://www.dell.com/learn/us/en/555/by-partner?c=us&l=en&s=biz
Hinchcliffe, . (2011). The "Big Five" IT trends of the next half decade: Mobile, social, cloud,
consumerization, and big data. Retrieved from http://www.zdnet.com/article/the-big-fiveit-trends-of-the-next-half-decade-mobile-social-cloud-consumerization-and-big-data/
Jones, C., (2013). PC Market Consolidating Around Top 3 Vendors. Retrieved from
http://www.forbes.com/sites/chuckjones/2013/10/10/pc-market-consolidating-around-top3-vendors/
Knorr, E (2013). 9 trends for 2014 and beyond. Retrieved from
http://www.infoworld.com/article/2612875/cloud-computing/9-trends-for-2014-andbeyond.html
Lomas, N., (2013). IDC: Tablet Sales Grew 78.4% YoY In 2012 Expected To Pass Desktop
Sales In 2014. Retrieved from http://techcrunch.com/2013/03/27/idc-tablet-growth-2012-2017/
Rizal, A., (2015) Five Forces Framework in Personal Computer Industry. Retrieved from
https://www.academia.edu/8226014/Five_Forces_Framework_in_Personal_Computer_In
dustry
Rogowsky, M., (2013). The Death of the PC Has Not Been Exaggerated. Retrieved from
http://www.forbes.com/sites/markrogowsky/2013/04/11/the-death-of-the-pc-has-notbeen-exaggerated/
Savitz, E., (2011). Tablet Fallout: Gartner Slashes 2011, 2012 PC Growth Forecast. Retrieved
from http://www.forbes.com/sites/ericsavitz/2011/03/03/tablet-fallout-gartner-slashes2011-2012-pc-growth-forecast/
StreetInsider, (2015). Dell Balance Sheets and Income Statements. Retrieved from
http://www.streetinsider.com/stock_lookup.php?q=dell&financials=balance&yq=2013-2
Wikipedia, (2015). Dell. Retrieved from https://en.wikipedia.org/wiki/Dell

DELL, INC.

Appendix A Dell Balance Sheets for Quarter 2 2013 & 2014

DELL Balance Sheet Quarter 2 2014

Current assets:
Cash and cash equivalents

11.19B

Short-term investments

643M

Accounts receivable, net

6.59B

Short-term financing receivables, net

3.13B

Inventories, net

1.47B

Other current assets

3.85B

Total current assets

26.87B

Property, plant, and equipment, net

Long-term investments

2.05B

Long-term financing receivables, net

1.47B

Goodwill

9.25B

Purchased intangible assets, net

2.99B

Other non-current assets

1.03B

Total assets

45.87B

Current liabilities:

38

DELL, INC.
Short-term debt
Accounts payable

12.05B

Accrued and other

3.66B

Short-term deferred services revenue

4.31B

Total current liabilities

22.76B

Long-term debt

4.08B

Long-term deferred services revenue

4B

Other non-current liabilities

4.26B

Total liabilities

35.09B

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock and capital in excess of $.01 par value; shares authorized:
7,000; shares issued: 3,387 and 3,369, respectively; shares outstanding:
1,834 and 1,918, respectively
Treasury stock at cost: 1078 and 976 shares, respectively

-32.15B

Retained earnings

30.38B

Accumulated other comprehensive income (loss)

-153M

Total stockholders equity

10.78B

Total liabilities and stockholders equity

45.87B

DELL Balance Sheet Quarter 2 2013

Current assets:
Cash and cash equivalents

11.52B

Short-term investments

372M

Accounts receivable, net

6.83B

Short-term financing receivables, net

3.17B

Inventories, net

1.62B

Other current assets

3.74B

Total current assets

27.25B

Property, plant, and equipment, net

Long-term investments

2.74B

Long-term financing receivables, net

1.34B

Goodwill

7.56B

Purchased intangible assets, net

2.61B

Other non-current assets

540M

Total assets

44.1B

Current liabilities:

39

DELL, INC.
Short-term debt
Accounts payable

11.19B

Accrued and other

3.23B

Short-term deferred services revenue

3.68B

Total current liabilities

20.71B

Long-term debt

5.83B

Long-term deferred services revenue

3.89B

Other non-current liabilities

3.91B

Total liabilities

34.35B

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock and capital in excess of $.01 par value; shares authorized:
7,000; shares issued: 3,387 and 3,369, respectively; shares outstanding:
1,834 and 1,918, respectively
Treasury stock at cost: 1078 and 976 shares, respectively

-32.15B

Retained earnings

29.6B

Accumulated other comprehensive income (loss)

-121M

Total stockholders equity

9.75B

Total liabilities and stockholders equity

44.1B

Appendix B Dell Income Statements for Quarter 2 2014 & 2013

DELL Income Statement Quarter 2 2014

Net revenue:
Products

11.33B

Services, including software related

3.19B

Total net revenue

14.51B

Cost of net revenue:

Products

9.77B

Services, including software related

2.06B

Total cost of net revenue

11.83B

Gross margin

2.69B

Operating expenses:
Selling, general, and administrative

2.1B

Research, development, and engineering

Total operating expenses

2.42B

Operating Income

272M

Interest and other, net

-53M

40

DELL, INC.
Income before income taxes

219M

Income tax provision

15M

Net income

204M

Earnings per share:

Basic

0.12

Diluted

0.12

Weighted-average shares outstanding:

Basic

1.76B

Diluted

1.76B

41

DELL, INC.

DELL Income Statement Quarter 2 2013

Click line-items for a historical chart and %
Net revenue:
Products

11.4B

Services, including software related

3.08B

Total net revenue

14.48B

Cost of net revenue:

Products

9.28B

Services, including software related

2.07B

Total cost of net revenue

11.35B

Gross margin

3.14B

Operating expenses:
Selling, general, and administrative

1.98B

Research, development, and engineering

Total operating expenses

2.24B

Operating Income

901M

Interest and other, net

-63M

Income before income taxes

838M

Income tax provision

106M

Net income

732M

Earnings per share:

Basic

0.42

Diluted

0.42

Weighted-average shares outstanding:

Basic

1.75B

Diluted

1.75B

(csimarket.com, 2015).

42