All's Not Well With Dell: Fool by Numbers
By
Anders Bylund
November 30, 2007
|
On Nov. 29, Dell (Nasdaq: DELL) released third-quarter 2008 earnings for the period ended Nov. 2, 2007.
- At first glance, it's hard to complain about 9% revenue growth and even better profit improvements in this hesitant economic environment -- but then you have to remember that HP is on an annual sales growth tear of about 14% now, and Apple (Nasdaq: AAPL) is strutting a 24% revenue boost.
- The geographical revenue mix is shifting around just a bit -- sales in the Americas clocked in 5% above the year-ago result, while the rest of the world wanted 13% more Dell products this time.
- The product mix isn't static, either. Servers and storage systems are in high demand, along with notebook computers. However, desktop sales are actually on the decline.
- Dell used to buy back upward of $1 billion worth of its own stock frequently, but turned off that faucet entirely about a year ago. With SEC investigations and restatements in the rearview mirror, the company plans to start buying shares again this December.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
Q3 2008
|
Q3 2007
|
Change
|
|
Sales
|
$15,646
|
$14,419
|
8.5%
|
|
Net Profit
|
$766
|
$601
|
27.5%
|
|
EPS
|
$0.34
|
$0.27
|
25.9%
|
|
Diluted Shares
|
2,266
|
2,238
|
1.3%
|
Get back to basics with the income statement.
Margin Checkup
|
Q3 2008
|
Q3 2007
|
Change*
|
|
Gross Margin
|
18.5%
|
16.6%
|
1.9
|
|
Operating Margin
|
5.3%
|
5.1%
|
0.2
|
|
Net Margin
|
4.9%
|
4.2%
|
0.7
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q3 2008
|
Q3 2007
|
Change
|
|
Cash + ST Invest.
|
$12,605
|
$9,318
|
35.3%
|
|
Accounts Rec.
|
$7,716
|
$6,333
|
21.8%
|
|
Inventory
|
$1,102
|
$680
|
62.1%
|
|
Liabilities
|
Q3 2008
|
Q3 2007
|
Change
|
|
Accounts Payable
|
$11,411
|
$10,335
|
10.4%
|
|
Long-Term Debt
|
$392
|
$579
|
(32.3%)
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q3 2008
|
Q3 2007
|
Change
|
|
Cash From Ops.
|
$998
|
$936
|
6.6%
|
|
Capital Expenditures
|
$172
|
$180
|
(4.4%)
|
|
Free Cash Flow
|
$826
|
$756
|
9.3%
|
|
Owner Earnings
|
$747
|
$538
|
38.8%
|
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap
|
Trailing P/E Ratio
|
CAPS Rating
|
|
International Business Machines (NYSE: IBM)
|
$146,570
|
15.9
|
***
|
|
Hewlett-Packard (NYSE: HPQ)
|
$131,002
|
19.0
|
****
|
|
Dell
|
$54,490
|
19.4
|
**
|
|
EMC (NYSE: EMC)
|
$41,000
|
27.5
|
*****
|
|
Sun Microsystems (Nasdaq: JAVAD)
|
$17,110
|
30.2
|
***
|
Using the latest reported numbers from Capital IQ.
Keep your partners close and the competition in your vest pocket.
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