Dell 2008 Annual Report Download - page 28

Table of Contents
Fiscal 2008 compared to Fiscal 2007
Net Revenue — Fiscal 2008 revenue increased 6% year-over-year to $61.1 billion, with unit shipments up 5% year-over-year. Revenue grew across
all segments except for Global Consumer. Revenue outside the U.S. represented approximately 47% of Fiscal 2008 net revenue, compared to
approximately 44% in the prior year. Outside the U.S., we produced 14% year-over-year revenue growth for Fiscal 2008. Combined BRIC revenue
growth during Fiscal 2008 was 27%. Worldwide, all product categories grew revenue over the prior year other than desktop PCs, which declined 1%
as consumers continued to migrate to mobility products.
In Fiscal 2008, our average selling price increased 2% year-over-year, which primarily resulted from our pricing strategy, compared to a 1%
year-over-year increase for Fiscal 2007. In Fiscal 2008, we experienced intense competitive pressure, particularly for lower priced desktops and
notebooks, as competitors offered aggressively priced products with better product recognition and more relevant feature sets.
During Fiscal 2008, the U.S. dollar weakened relative to the other principal currencies in which we transact business; however, as a result of our
hedging activities, foreign currency fluctuations did not have a significant impact on our consolidated results of operations.
Operating Income — Operating income increased 12% year-over-year to $3.4 billion. The increased profitability was mainly a result of strength in
mobility, solid demand for enterprise products, and a favorable component-cost environment. In Fiscal 2007, operating income was $3.1 billion.
Net Income — Net income increased 14% year-over-year to $2.9 billion for Fiscal 2008 from $2.6 billion in Fiscal 2007. Net income was impacted
by a $112 million year-over-year increase in investment and other income, partially offset by an increase in our effective tax rate from 22.8% to
23.0%.
Revenues by Segment
We conduct operations worldwide. Effective in the first quarter of Fiscal 2009, we combined our consumer businesses of EMEA, APJ, and
Americas International (formerly reported through Americas Commercial) with our U.S. Consumer business and re-aligned our management and
financial reporting structure. As a result, effective in the first quarter of Fiscal 2009, our operating structure consisted of the following four
segments: Americas Commercial, EMEA Commercial, APJ Commercial, and Global Consumer. Our commercial business includes sales to
corporate, government, healthcare, education, small and medium business customers, and value-added resellers and is managed through the
Americas Commercial, EMEA Commercial, and APJ Commercial segments. The Americas Commercial segment, which is based in Round Rock,
Texas, encompasses the U.S., Canada, and Latin America. The EMEA Commercial segment, based in Bracknell, England, covers Europe, the
Middle East, and Africa. The APJ Commercial segment, based in Singapore, encompasses the Asian countries of the Pacific Rim as well as
Australia, New Zealand, and India. The Global Consumer segment, which is based in Round Rock, Texas, includes global sales and product
development for individual consumers and retailers around the world. We revised previously reported operating segment information to conform to
our new operating structure in effect during the first quarter of Fiscal 2009.
On December 31, 2008, we announced our intent during Fiscal 2010 to move from geographic commercial segments to global business units
reflecting the impact of globalization on our customer base. Customer requirements now share more commonality based on their sector rather than
physical location. We expect to combine our current Americas Commercial, EMEA Commercial, and APJ Commercial segments and realign our
management structure. After this realignment, our operating structure will consist of the following segments: Global Large Enterprise, Global
Public, Global Small and Medium Business ("SMB"), and our existing Global Consumer segment. We believe that these four distinct, global
business organizations can capitalize on our competitive advantages and strengthen execution. We expect to begin reporting the four global business
segments once we complete the realignment of our management and financial reporting structure, which is expected to be complete in the first half
of Fiscal 2010.
During the second half of Fiscal 2008, we began selling desktop and notebook computers, printers, ink, and toner through retail channels in the
Americas, EMEA, and APJ in order to expand our customer base. Our goal is to have strategic relationships with a number of major retailers in our
larger geographic regions. During Fiscal 2009, we continued to expand our global retail presence, and we now reach over 24,000 retail locations
worldwide.
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