Dell's premature release
By Bala Shah

Dell is the second largest personal computer manufacturer in the world with Dell India being one of the star performers.  In Feb, 2009, Dell India underwent a massive reorganization with the creation of 4 divisions to manage the booming market

Dell, like every public company, has to post its quarterly reports at a fixed time so that everyone in market gets an equal opportunity to manage investments/potential investments in the technology giant.

Oops.  Someone in Dell Investor Relations posted their second quarter 2010 financials results 3 minutes earlier giving some stockbrokers an advantage.  During this early window of 3 minutes, Dell shares soared by 8 percent. That's how quickly the market operates.  Dell had announced better than expected results and that was good enough to buy Dell shares.

Dell has apologized for this inadvertent error which disadvantaged most of the market.

So, what were the financial results?  Dell told the media via its press release

“
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

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.
      

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-year increase in unit volume and 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.
“

(Techgoss had published the following story on April 30, 2009)

Dell India cuts food, transport perks
By Kanwar Sharma

Dell is the second largest personal computer manufacturer in the world with Dell India being one of the star performers.  Last month, Dell India underwent a massive reorganization with the creation of 4 divisions to manage the booming market. Despite a turnover of $900 million in India last year and huge profits, locals are undergoing a painful cost cutting exercise.

Dell India has 12000 employees who have worked together to ensure that its market share grew by 11 percent in 2008 – 2009.

A senior female manager rang techgoss to convey the shock and sorrow amongst Dell employees after their meal subsidy was taken away. Big ships have big burdens as always stated. The recession bite has touched everyone; this has taken a literal manifestation in Dell India.  In what is described an appetite killing move, Dell offices as well as their BPOs at Bangalore, Hyderabad, Mohali and Gurgaon will see all food subsidies cut.
 
Come May 1, 2009 and staff in Dell would no longer enjoy Sodexho meal coupons as the facility is being withdrawn to cut costs. Each employee at Dell is issued a Sodexho Card in which he/she gets a value of Rs.648/- and this amount can be utilised to have food in the company cafeteria. This Sodexho card is heavy subsidized and every staff member only pays Rs.250 from their salary every month for this food facility.

This amount of Rs. 648 is loaded on 1st of every month. Staff can use this amount for buying food and if the amount gets consumed earlier then 30 days he/she has to use cash for buying food.  Conversely, if there are any Sodexho food credits left over, they get carried forward to next month with the addition of new amount. However, the food quality is very low and prices are much higher then market prices.

From 1st May this facility would be withdrawn and staff would no longer be able to use Sodexho, and rather would have to pay in cash for their meal expenses.

Dell has already made some changes in the transportation structure where staff doing a general shift [9-6] is no longer entitled to cabs but have to avail of the bus facility

Techgoss note:  The following is the communication send by Dell India to its employees

From: DELL_INDIA_COMMUNICATIONS
Sent: Monday, April 27, 2009 8:50 PM
Subject: Meal Subsidy - Change in Policy
 
To: All employees of Dell International Services and Dell
India Pvt. Ltd.
From: Ganesh, Sameer, Vijay, Vivek, Harish and the India Leadership Team

In line with our constant endeavor to 20control operational expenditure, ensuring market competitiveness and in keeping with the changing compensation and benefits (C&B) practices, Dell in India would not be extending the meal subsidy provided to its employees. The change in policy is effective May 1, 2009.
 
This policy change would cease all meal subsidy benefits like monthly credit to Sodexho cards, lunch coupons provided in certain locations, Sodexho coupons, etc.
 
To enable employees utilize the available balance in their Sodexho cards, the swiping machines would be operational till June 2030, 2009. Sodexho cards would be deactivated on midnight of June 30, 2009 and recovery / utilization of available balance may not be an option after that.
 
Attached are the FAQ that would help clarify some of your queries.