Financial Analysis of Dell Inc.
Dell Inc. is a multinational information technology corporation, which is based in Round Rock, Texas. It manufactures, sells, and supports computers and other technological products and services, such as servers, data storage devices, software, televisions, cameras, printers, and MP3 players. The most known mergers and acquisitions include Alienware of 2006, Perot Systems in 2009 and Force 10 Networks, earlier this year. Dell is one of the largest technological corporations in the world. INDUSTRY
Dell is in an industry where there are relentless advances in technological products and services. The industry is constantly hindered by economic changes and competitive pricing pressures with all sorts of competitors from the branded level to the generic level. Dell remains a great competitor in its industry for the reason it has managed to adapt to these changes. The company competes with abilities to offer competitive solutions to customers that provide with the most product and features that are in most demand, along with superior quality and customer service. Unlike most of its competitors, Dell has direct relationships with its customers. This allows to company direct access to customers, allowing the company to determine and understand what customers need and desire. Because of this strategy, Dell has a competitive advantage in the industry. On a global level, the company sells desktops, notebooks, printers, notebook computers, ink, displays, and monitors, along with other accessories. ANALYSIS OF COMPANY FINANCIAL STATEMENTS (See Table 1 in Excel document) In 2010, the economic slowdown from 2009 was carried over, causing a decrease in revenue. The spending trends of decreased in 2010. The slowdown impacted the spending trend of commercial customers which made up seventy-seven percent of the revenue in 2010. The consumer segment experienced a decrease due to consumers the company competitively pricing its products and consumers choosing lower-priced products. Toward the end of 2010, the company began to experience an increase in revenue, which is expected to carryover in 2011. 2010 compared to 2009
In 2010, product revenue decreased by 17%. The decrease is the result of customer demand from commercial buyers and lower price products and competitive pricing in the consumer segment. The revenue for services, such as software increased in 2010. The increase was mainly due to Dell’s acquisition of Perot Systems which increased revenue by $588 million. Aside from the acquisition, the services category for the company decreased by 2%, which was due to a decrease in the hardware segment of 6%. Because of the economic slowdown, the average selling price of products has decreased. The selling price decrease was mainly due to competitive pricing and the increase for lower-priced products. Internationally, there was revenue decline of 16%, which is more than the U.S decrease, which stands and 11%. The global revenue represented nearly 47% of revenue for 2010. 2009 compared to 2008
There was in decrease in product revenue during 2009, mainly due to a decrease in selling prices. There was a change in revenue on the commercial and consumer level which influenced lower prices. Desktops experienced the largest decrease at 10%, which contributed to the decline in product revenue. Services for the company saw an increase. Software was the service that experienced the highest increase at 41%. This increase is primarily due to the acquisition with ASAP Software Express, Inc., in 2008. Outside of the United States, product sales contributed to nearly 48% of the net revenue for 2009. The global market experienced 4% increase, while the U.S. experienced a 3% decrease. In the U.S. the decrease is mostly economic slowdown causing the decline in commercial business. Despite the decrease in the U.S., Dell’s footprint expanded internationally. Dividends and Purchases of common stock
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