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SUBMITTED TO:
SIR. JAVED ZAFAR
GROUP MEMBERS:
ANWAR ZEB FA09-MBA-170 ADEEL MEHMOOD FA09-MBA-200 RANA M. ZAHID IQBAL FA09-MBA-135 RASHID MINHAS FA09-MBA-137 M. SAQIB KHAN FA09-MBA-107
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CONTENTS
INTRODUCTION...................................................................................................................................................... 9 COMPETITORS........................................................................................................................................................ 9 MERGERS AND ACQUISTIONS ................................................................................................................................. 9 Early history of dell: ............................................................................................................................................... 9 CORPORATE OBJECTIVES: ..................................................................................................................................... 10 MISSION & VISION OF DELL: ................................................................................................................................. 11 MISSION:.......................................................................................................................................................... 11 VISSION: ........................................................................................................................................................... 11 PRODUCTS OFFERED BY DELL.............................................................................................................................. 12 BUSINESS PRODUCTS:....................................................................................................................................... 12 CUSTOMER S PRODUCTS: ................................................................................................................................. 12 OTHER PRODUCTS: ........................................................................................................................................... 12 Board members include: ...................................................................................................................................... 13 TYPE OF B.O.D COMMITTEES: ............................................................................................................................... 13 Audit committee responsibilities: ..................................................................................................................... 14 Compensation committee: ............................................................................................................................... 14 Finance committee:.......................................................................................................................................... 14 GOVERNENCE AND NOMINATING COMMITTEE:............................................................................................... 15 LIST OF CHIEF EXECUTIVE OFFICERS OF DELL: ............................................................................................... 16 Michaell Dell: ................................................................................................................................................... 16 Born ............................................................................................................................................................. 16 Education ..................................................................................................................................................... 16 Publications of Dell: .................................................................................................................................... 17
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Notable:........................................................................................................................................................ 17 Pay .............................................................................................................................................................. 17 Wealth.......................................................................................................................................................... 17 Achievments of Dell: .................................................................................................................................... 18 Political contributions ................................................................................................................................. 18 Philanthropy ................................................................................................................................................. 18 Performance of Michael dell;...................................................................................................................... 18 Kelvin Rollins .................................................................................................................................................... 19 Born ............................................................................................................................................................. 19 Education: ................................................................................................................................................... 19 Achievments of Kevin Rollins: ..................................................................................................................... 19 CAREER: ................................................................................................................................................... 19 Pay : ............................................................................................................................................................. 20 Performance of Kevin: ................................................................................................................................ 20 FINANCIAL STATEMENTS OF DELL ......................................................................................................................... 21 FINANCIAL RATIOS AND ANALYSIS .................................................................................................................... 27 Working capital: ......................................................................................................................................... 27 Current ratio: ............................................................................................................................................. 28 Quick ratio:................................................................................................................................................. 29 Debt ratio: ................................................................................................................................................... 30 Debt to equity ratio:.................................................................................................................................... 31 Return on assets:......................................................................................................................................... 32 Account receivable turnover: ..................................................................................................................... 33 Inventory turnover: .................................................................................................................................... 34 Net profit margin:....................................................................................................................................... 35
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Gross profit margin: ................................................................................................................................... 36 DELL HALLMARKS ................................................................................................................................................. 38 Future strategy of expansion ................................................................................................................................ 38 DELL S PATTERN OF SHARE HOLDING & MOJOR SHAREHOLDERS .......................................................................... 39 Equity and Debt................................................................................................................................................ 39 DELL .............................................................................................................................................................. 39 Major Direct Holders ........................................................................................................................................ 40 Top Institutional Holders .................................................................................................................................. 41 Top Mutual Fund Holders ................................................................................................................................. 41 INCREASE OR DECEREASE IN THE VALUE OF SHARE OF DELL FOR PAST 5 YEARS .................................................... 42 EARNING PER SHARE RATIO OF DELL: ................................................................................................................... 43 TAXES AND DUTIES PAID BY DELL TO GOVT .......................................................................................................... 44 COMPENSATION PATTERN FOR CEO & EMPLOYEES .............................................................................................. 45 Base Salary ....................................................................................................................................................... 45 Compensation for executive ................................................................................................................................. 46 Process............................................................................................................................................................. 46 Compensation Consultants ............................................................................................................................... 46 Elements of the Total Compensation Package................................................................................................... 46 EXECUTIVE COMPENSATION PHILOSOPHY AND CORE OBJECTIVES ........................................................................ 47 Globalization .................................................................................................................................................... 47 Product Leadership .......................................................................................................................................... 47 Customer Experience ................................................................................................................................... 47
Winning Culture ............................................................................................................................................... 47 CRITICISM FACED BY DELL INC... ON COMPENSATION ISSUE: .............................................................................. 49 REASONS FOR COMPENSATIONS ........................................................................................................................ 50
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SOCIAL RESPONSIBILITY OF DELL .......................................................................................................................... 50 RESPONSIBLE OPERATIONS............................................................................................................................... 51 Bamboo packing............................................................................................................................................... 51 Driving energy efficiency .................................................................................................................................. 53 Reducing energy consumption;......................................................................................................................... 53 Environmental management systems ............................................................................................................... 54 Forest protection:............................................................................................................................................. 54 DELL COMMITMENT TO COMUNITIES................................................................................................................... 54 FUNDS RAISED FOR CHILDREN; ......................................................................................................................... 54 Closing the technology gap in the U.S. .............................................................................................................. 57 GLOBAL H.I.V AWARNESS PROGRAM OF DELL INC:.......................................................................................... 57 Code of conduct laid down by dell s management: ........................................................................................... 58 DELL INC. IS WORKING FOR THE EDUCATION: ................................................................................................... 58 Ethics and Values.............................................................................................................................................. 58 Envoirmental greening program: ...................................................................................................................... 59 CORPORATE GOVERNENCE PRACTICES PERFORMED BY DELL INC.......................................................................... 59 Corporate Governance Principles ................................................................................................................... 59 Roles of Board and Management.......................................................................................................................... 59 Role of Board of Directors ................................................................................................................................ 59 y y y y y y Management planning and oversight ................................................................................................... 59 Strategic and operational planning ...................................................................................................... 60 Major corporate actions ...................................................................................................................... 60 Financial reporting............................................................................................................................... 60 Governance, compliance and risk management ................................................................................... 60 General advice to management ........................................................................................................... 60
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Board Composition and Structure......................................................................................................................... 60 y y General qualifications .............................................................................................................................. 60 Independence ² ...................................................................................................................................... 60
CORRUPTION & FRAUD COMIITED BY DELL INC .................................................................................................. 63 New York court find guilty dell: ......................................................................................................................... 63 New York sues for dell fraud: ............................................................................................................................ 63 DELL WILL SETTLE OVER ACCOUNTING FRAUD:..................................................................................................... 64 Dell Reaches Settlement with Securities and Exchange Commission: .................................................................... 65 EFFECTS OF THESE FRAUDS ON SUBSEQUENT PROFIT & REPUTATION: ................................................................. 66 REFERENCES......................................................................................................................................................... 68
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ACKNOWLEDGEMENT
First of all we are thankful to Almighty ALLAH who gave us strength for the completion of this project. And secondly thanks to our respected Sir Mr. JAVED ZAFAR who directed us to focus really on the Marketing strategies in departments in a very effective way. We are really thankful to all of our class fellows for their cooperation that really helped us in providing the information regarding the company.
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INTRODUCTION
Dell incorporation is an American multinational information technology corporation based in ROUND ROCK, TEXAS, UNITED STATES. It develops, sales and supports computer and the related product and services. It employees more then 96000 people worldwide. About 51.7 % people worked in other countries . Dell is listed at # 38 on the FORTUNE 500 (2010). Fortune also lists dell as the # 5 most admired company in its industry. It is the second largest non- oil company in TEXAS. And the largest company in the AUSTIN area .
COMPETITORS
Dell's major competitors include Apple, Hewlett-Packard (HP), Acer, Toshiba, Gateway, Sony, Asus, Lenovo, IBM, Samsung, and Sun Microsystems. Dell and its subsidiary, Alienware, compete in the enthusiast market against AVADirect, Falcon Northwest, VoodooPC (a subsidiary of HP), and other manufactures.
MERGERS AND ACQUISTIONS
Acquisitions Alienware · Dell EqualLogic · Perot Systems · KACE Networks · Ocarina Networks · Compellent Technologies
EARLY HISTORY OF DELL :
In 1984 Dell inc. was found by MICHAEL S DELL at the age of 21 when he started purchasing computer parts at whole sale price and then assembling them . In 1985, the founder dropped out of school, got a family loan for $300,000 dollars and began to give his full attention to the new company.
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After realizing increase in revenues from 6 million to 40 million from 1985 to 1986 MICHAEL DELL found that he had to employ new marketing managers to help in managing the company operations. After believing that new management team is moving for away from its initial direct sale model MICHAEL DELL criticized his marketing team and asked them to leave the organization . In 1988 dell corporation launch three new PC models. it opened an office in Canada, began offer a leasing option and increased its emphasis on targeting larger clients . it completed its initial public offering , selling share for $ 8.50 each , and grew from 30 million dollar company to a company with 90 million dollar in 1989 Dell inc hired former IBM corporation engineer Glenn Henry to upgrade its machines for lowering costs . it also built a manufacturing plant in Ireland and offices in France, Italy, and Sweden. In 1996, Dell began selling their products through their website and three years later in 1999 by acquiring the Compaq Dell became known as the top seller of personal computer systems in the United States. IN 2002 Dell starts expansion by providing products such as televisions, digital audio players and computer printers In 2004 company built a new manufacturing assembly plant near Winston- Salem, North Carolina and Michael Dell while deciding to appoint Kevin Rollins as new CEO, decided to retain the position of Chairman of the Board. In 2007 CEO Kevin Rollins resigned and Michael Dell resumed his position as CEO
CORPORATE OBJECTIVES :
The main objectives of our company are to make sure that: y The products that we produce shall meet all customer requirements.
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y Our response time to our customers¶ inquires and requirements shall meet our customer¶s needs. y We shall maintain sufficient profits.
MISSION & VISION OF DELL :
MISSION: Dell's 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 company accountability Best-in-class service and support Flexible customization capability Superior corporate citizenship Financial stability
VISSION: It¶s the way we do business. It's the way we interact with the community. It's the way we interpret the world around us-- our customers¶ 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.
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So Dell needs full customer satisfaction. In order to become the most successful computer company, they need the newest technology and loyal customers.
PRODUCTS OFFERED BY DELL :
Dell offers a variety of products according to its customers e.g. business products , home products etc BUSINESS PRODUCTS: OptiPlex (office desktop computer systems) Vostro (office/small business desktop and notebook systems) n Series (desktop and notebook computers shipped with Linux or FreeDOS installed) Latitude (business-focused notebooks) Precision (workstation systems and high-performance notebooks),[35] PowerEdge (business servers) PowerVault (direct-attach and network-attached storage) PowerConnect (network switches) Dell/EMC (storage area networks) EqualLogic (enterprise class iSCSI SANs) CUSTOMER S PRODUCTS: Inspiron (budget desktop and notebook computers) Studio (mainstream desktop and laptop computers) XPS (high-end desktop and notebook computers) Studio XPS (high-end design-focus of XPS systems and extreme multimedia capability) Alienware (high-performance gaming systems) Adamo (high-end luxury laptop) OTHER PRODUCTS:
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Usb key drives Lcd television Keyboards Printers Plasma tv Projectors Hdtv Monitors
BOARD MEMBERS INCLUDE :
Michael Dell Chairman of the Board and Non-Independent Director James W. Breyer Finance, Leadership Development and Compensation (Chair)
Donald J. Carty Non-Independent Director
William H. Gray, III Governance and Nominating (Chair); Leadership Development and Compensation
Judy C. Lewent Finance (Chair), Audit
Thomas W. Luce, III Audit, Governance and Nominating
Klaus S. Luft Audit
Alex J. Mandl Presiding Director Audit (Chair), Governance and Nominating Samuel A. Nunn Finance, Leadership Development and Compensation
Shantanu Narayen
Leadership Development and Compensation Ross Perot, Jr.
Gerard J. Kleisterlee
TYPE OF B.O.D COMMITTEES :
y Audit Committee Charter
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y Compensation Committee Charter y Finance Committee y Governance And Nomination Committee AUDIT COMMITTEE RESPONSIBILITIES: Their responsibilities include internal control, financial statement analysis, external audit COMPENSATION COMMITTEE: Their responsibilities include to make compensation policy for executive officers and non employee directors of Dell, to aggregate salary and bonus budget and guidelines for all other Dell employees. Acting as administrator of Dell's compensation plans, including granting awards to each executive officer and director, Preparing the Committee report required by the rules of the Securities and Exchange Commission to be included in Dell's annual proxy statement or Annual Report on Form 10-K. Reviewing and discussing with the full Board Dell's management succession plan at least annually, as well as Dell's leadership development strategies and executive retention and diversity strategies. Evaluating the need for, and provisions of, employment contracts or severance arrangements for Dell's executive officers.
FINANCE COMMITTEE: The responcibilities of finance committee include
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Capital structure plans and strategies and specific equity or debt financings; Capital expenditure plans and strategies and specific capital projects; Strategic and financial investment plans and strategies and specific investments; Mergers, acquisitions and divestitures; Plans and strategies for managing foreign currency exchange exposure and other exposures to economic risks. The Committee shall have the resources and authority to discharge its responsibilities, including the authority, to the extent it deems necessary or appropriate, to retain outside counsel and other advisors. Dell shall provide funding, as determined by the Committee, for payment of compensation to any independent advisors or administrative support employed by the Committee. Any action duly and validly taken by the Committee pursuant to the power and authority conferred under this Charter shall for all purposes constitute an action duly and validly taken by the Board and may be certified as such by the Secretary or other authorized officer of Dell.
GOVERNENCE AND NOMINATING COMMITTEE: The responcibilities of governance and nominating committee include Formulating, recommending to the Board and overseeing the implementation and administration of Dell's corporate governance structure and framework. Reviewing Dell's Corporate Governance Principles at least annually and recommending changes, as necessary, to the Board for adoption.
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Periodically reviewing, and approving changes to, Dell's code of conduct and other policies with respect to legal compliance, conflicts of interest and ethical conduct. Leading the search for, screening, evaluating and recommending to the Board qualified candidates or nominees for election or appointment as directors, consistent with the Board's Director Nomination Policy.
LIST OF CHIEF EXECUTIVE OFFICERS OF DELL :
There are only two ceo¶s of dell computers yet. Michael S Dell as being founder of the company served for long time as being ceo of the company ( 1984- 2004, present) Kelvin Rollins who orked as a ceo of Dell computers from 2004-2007.
MICHAELL DELL:
..
BORN:
February 23, 1965, in Houston to an orthodontist and a stockbroker. Made his first $1,000 by selling stamps at age 12, and sold newspaper subscriptions for the nowdefunct HOUSTON POST.
EDUCATION :
Attended the University of Texas wishing to get a medicine degree but started a computer business in his dormitory room. Dropped out in 1984 to focus on building the company by emphasizing direct sales to customers rather than going through retail middlemen.
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. FOUNDATION OF COMPANY:
With just one thousand dollars in his pocket Dell started "PC's Limited" in 1984. Dell started building and selling personal computers from stock computer parts. The idea that set the young entrepreneur apart from others was to sell directly to the customer, rather than going through a third party to sell his products. PC's Limited allowed the customer to customize their computer before it was custom built to their specifications. All computers were sold direct to the customer with the use of order forms, phone orders, and now Internet orders.
Publications of Dell:
Michael has published his partly autobiographical book "Direct From Dell: Strategies That Revolutionized an Industry". The book is written in an entertaining, fast paced style that explains how Dell turned his $1000 company into a megacorporation worth more than $100 billion
NOTABLE: In 1992 at the age of 27 Dell became the youngest CEO of a Fortune
500 company. In 2002, Dell received an honorary doctorate in economic Science from the University of Limerick in honor of his investment in Ireland and the local community and for his support for educational initiatives.[ . In 2004 Dell stepped down from his role as CEO at Dell Inc but remains the Chairman of the Board
PAY In the company's 2006 fiscal year, he was paid a $950,000 salary, a $1.8
:
million bonus and $1 million in other compensation. As of May 5, 2006, he owned 216.3 million shares and held options exercisable in the next 60 days on 9.8 million more shares. He owned 9.88 percent of all the company's outstanding shares.
WEALTH Estimated at $15.5 billion.
:
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ACHIEVMENTS OF DELL:
Because of the phenomenal success of the company, he has been honored many times for his visionary leadership, earning the titles ³Entrepreneur ... of the Year´ from Inc. magazine, ³Man of the Year´ by PC Magazine, ³Top Chief Executive Officer in American Business´ from Worth Magazine and ³Chief Executive Officer of the Year´ by Financial World and Industry Week magazines. In 1997, 1998, and 1999, Mr. Dell was included in Business Week's list of ³The Top 25 Managers of the Year´. In addition, executive search firm Heidrick and Struggles named him their ³High Impact Chief Executive Officer´ for 1996 and 1997. He attended The University of Texas at Austin.
POLITICAL CONTRIBUTIONS
In 2004, Susan and Michael Dell were among 53 contributors of $250,000 (the maximum legal donation) to the second inauguration of President George W. Bush.[29]
PHILANTHROPY: With his wife, he formed the Michael and Susan Dell
Foundation, which has an endowment of more than $1 billion and focuses on children's issues.
SOURCES: DELL INC. WEB SITE, COMPANY FILINGS, MICHAEL AND SUSAN DELL FOUNDATION WEB SITE, AP ARCHIVES. PERFORMANCE OF MICHAEL DELL;
The company's share price has fallen 66 percent in the past decade with Dell as the company's chairman, Rees note Shareholders with 378 million of around 1.5 billion total votes -- about 25.2 percent -- withheld support for Michael Dell's election to the company's board. In 2009.michael dell was able to acquire Perot systems in a reported $3.9 billion deal that was a chain in expansion.
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The SEC also alleged that Dell executives manipulated earnings by keeping "cookie jar" reserves, which were used to cover shortfalls in operating results from fiscal 2002 to fiscal 2005. It cost the company US$100 million and Michael Dell $4 million to settle those allegations. As part of the settlement, neither the company nor Dell admitted to wrongdoing
KELVIN ROLLINS
BORN : he was born in 1953 in Utah, USA. EDUCATION:
He got his early education is Utah USA. He had done done his graduation in Humanities and Civil Engineering. In 1984 he completed his MBA from Alma mater Brigham Young University
ACHIEVMENTS OF KEVIN ROLLINS:
In 2006 Rollins was named by London's CBR as the 9th Most Influential person in the Enterprise IT sector.
CAREER:
Before joining Dell in April 1996, Rollins was vice president and partner of Bain & Company where he specialized in strategies and management for high technology and consumer product client Rollins was Senior VP of Corporate Strategy till 1996, He acted as president of Dell Americas from 1996±2001 overseeing operations in the United States, Canada, Mexico, and Latin America, He worked as COO from 2001±2004, He was also president from 2001±2007, and remained CEO from 2004±2007.[
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Rollins became the chairman of the American Enterprise Institute's Board of Trustees on January 1, 2009.
PAY :
In 2006, Forbes magazine listed Rollins as the 18th highest compensated CEO in the world at $39.31 million Upon leaving Dell in 2007, Rollins was paid $48.5 million in cash related to expired stock options.[5]
PERFORMANCE OF KEVIN:
Kevin caused a failure period during which lost its lead in PC market share to Hewlett-Packard and an investigation by the SEC for possible accounting improprieties began. Several executives have left the company in recent months, including CFO Jim Schneider, who was forced to leave the organization at the end of January In 2006, Dell actually started growing slower than the market, the first time that has happened since the company started back in the mid-1980s. HP overtook Dell as the largest PC manufacturer midway through 2006. Dell fell short of that $60 billion target during its 2006 fiscal year, with $55.9 billion in revenue, and the $80 billion target seems to have vanished. In 2006 kevin have to launch the first and largest recall of batteries .the actual problem was sony whose batteries was Dell inc was using. It spoiled Dell¶s image that resulted in the loss of market share
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In 2006. Kevin was able to acquire a leading company named as Alienware. In the second quarter of 2006 Dell had between 18% and 19% share of the worldwide personal computer market, compared to HP with roughly 15%. In 2006, Dell cut its prices in an effort to maintain its 19.2% market share. However, this also cut profit-margins by more than half, from 8.7 to 4.3 percent. As a result, at the end of 2006 Dell's overall PC market-share stood at 13.9% (versus HP's 17.4% Rollins was unable to timely address the issue of customer dissatisfaction. Its investment of $150 million in customer service improvements was too late to be fruitful. Rollins was unable to change its manufuctring activities from intel processor to AMD processors...although Intel was late to release a dual-core Xeon processor, while AMD had a dual-core Opteron in the market for months Many in the PC and server industry believe this fealty was due to pricing guarantees made by Intel for Dell's exclusive support. But the competitive pressure became too strong to ignore, and last year Rollins reversed course and announced plans to release desktops, notebooks and servers based on AMD's chips despite saying for years that he had no interest in doing so.
FINANCIAL STATEMENTS OF DELL
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Income Statement of Dell Inc.
2010
Operating Revenue 52,902
2009
61,101
2008
61,133
2007
57,420
2006
55,788 45,503
Cost of Revenue
-42,789
-49,375
-48,855
-47,433
ross Operating Profit
10,113
-6,465 -624
11,726
-7,102 -663
12,278
-7,538 -610
9,987
-5,948 -498
10,28 5
-5,051 -458
Selling/ e neral/Admin Expense Research & Development
EBITDA Depreciation & Amortization
Operating Income
Interest Income
Other Income, Net Total Income Avail For Interest Expense (EBIT) Interest Expense Pre-Tax Income Income Taxes
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3,024 -852
3,961 -769
4,130 -607
3,541 -471
4,776 -394
2,172
57
-45 2,184 -160 2,024 -591
3,192
180
47 3,417 -93 3,324 -846
3,523
496
-64 3,872 -45 3,827 -880
3,070
368
-48 3,390 -45 3,345 -762
4,382
308
-53 4,637 -29 4,608 -1,006
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Balance Sheet Dell Inc.
Assets
Cash and Equivalents Marketable Securities Receivables Inventories Other Current Assets
in Millions of Dollars
2010
10,635 373 8,543 1,051 3,643
2009
8,352 740 6,443 867 3,749
2008
7,764 08 7,693 1,180 3,035
2007
9,546 752 6,152 660 2,829
2006
7,054 2,016 5,448 588 2,688
Total Current Assets
Net Fixed Assets Intangibles Cost in Excess Other Non-Current Assets
24,245
2,181 1,694 4,074 1,458
20,151
2,277 724 1,737 1,611
19,880
2,668 780 1,648 2,585
19,939
2,409 3,287
17,794
1,993 3,465
T. Non-Current Assets
9,407
6,349
7,681
5,696
5,458
Total Assets
33,652
26,500
27,561
25,635
23,252
Balance Sheet Dell Inc.
Liabilities & Equities
in Millions of Dollars
2010
Accounts Payable Short Term Debt Accrued L a bilities 11,373 663 3,884
2009
8,309 113 1,544
2008
11,492 225 1,920
2007
10,430 188 2,770
2006
9,868 65 2,429
Deferred Revenues Other Current Liabilities
Total Current Liabilities
Long Term Debt Other Non-Current Liabilities
Total Non-Current Liabilities Total Liabilities
ommon Shareholder's Equity
Total Liabilities & Shareholder's Equity
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3,040 -
2,649 2,244
2,486 2,403
2,032 2,371
1,842 1,969
18,960
3,417 5,634
14,859
1,898 5,472
18,526
362 4,938
17,791
569 2,947
16,173
625 2,407
9,051 28,011
5,641
7,370 22,229
4,271
5,300 23,826
3,735
3,516 21,307
4,328
3,032 19,205
4,047
£
33,652
26,500
27,561
25,635
23,252
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ANALYSIS OF FINANCIAL STATEMENTS
INCOME STATEMENT (Horizontal Analysis)
2010
Operating Revenue
Cost of Revenue -42,789
Net Fixed Assets
Intangibles Cost in Excess
Other Non-Current Assets
2,181
1,694 4,074 1,458
109
2,277
724 1,737
114
2,668
780 1,648
134
2,409
-
121
1,993
-
100
42
1,611
46
2,585
75
3,287
95
3,465
100
T. Non-Current Assets
9,407
33,652
172
145
6,349
26,500
116
114
7,681
27,561
141
119
5,696
25,635
104
110
5,458
23,252
100
100
Total Assets
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Balance Sheet Horizontal Analysis
Liabilities
Accounts Payable Short T erm Debt Accrued Liabilities Deferred Revenues
2010
11,373 663 3,884 3,040
%
115 1020 160 165
2009
8,309 113 1,544 2,649
%
84 174 64 144
2008
11,492 225 1,920 2,486
%
116 346 79 135
2007
10,430 188 2,770 2,032
%
106 289 114 110
2006
9,868 65 2,429 1,842
%
100 100 100 100
Other Current Liabilities
-
2,244
114
2,403
122
2,371
120
1,969
100
Total Current Liabilities Long Term Debt
Other Non-Current Liabilities T otal Non-Current Liabilities
T otal Liabilities
18,960 3,417
5,634 9,051
28,011
117 547
234 299
146
14,859 1,898
5,472 7,370
22,229
92 304
227 243
116
18,526 362
4,938 5,300
23,826
115 58
205 175
124
17,791 569
2,947 3,516
21,307
110 91
122 116
111
16,73 625
2,407 3,032
19,205
100 100
100 100
100
Common Shareholder's Equity
5,641
139
4,271
106
3,735
92
4,328
107
4,047
100
Total Liabilities & Shareholder's Equity
33,652
145
26,500
114
27,561
119
25,635
110
23,252
100
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FINANCIAL RATIOS AND ANALYSIS
WORKING CAPITAL:
W r i
Capi al = Curre Liabili ies
Asse s - Curre
F r 2008 F r 2009 F r 2010
19880
20151 24245
18526
14859 18960
1354 5292 5285
Analysis:
y The dell company has a positive working capital that shows it is able to deal current obligation.
y The present scenario shows that company is more prominent in 2010 than
previous years as seen in previous record.
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¤
¤
Years
C. Asse s
C. Liabili ies
W. Capi a l
28
CURRENT RATIO:
Curre
Rati = Curre t Assets / Curre t Liabilities
F r 2008 F r 2009 F r 2010
19880
20151
18526
14859
1.07 1.36 1.28
24245
18960
Analysis:
y The company has current ratio greater than one that shows it is liquidated. y The previous record also shows that it is becoming more liquidated in current year than past.
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Years
C. Assets
C. Liabilities
C. Rati
¥ ¦ ¦
29
QUICK RATIO:
Aci Test Rati = Cas E ualiant + ar etable ecurities / Current Liabilities
Years
C. E ualiant
et A/C Rec.
Current Liabilities
Aci Test Rati
F r 2008 F r 2009 F r 2010
7764 8352 10635
208 740 373
1693 6443 8543
18526 14859 18960
0.52
1.05
1.03
Analysis:
y In 2008, company was having ratio of 0.52 that was a mark that it is unable to properly adhere creditors. y In 2008, company quick ratio increased to 1.03 showing its ability to satisfy customer obligations.
y
The firm¶s quick ratio was lower than its current ratio that indicates that its current assets were having inventories in larger amounts.
COMSATS INSTITUTE OF INFORMATION AND TECHNOLOGY ISLAMABAD
Analysis:
y The dell company has a debt ratio of 0.83 in current year that shows that it is using 86% debt in financing its assets. y A large amount of debt ratio also shows that company is more risky because it depends upon its creditors.
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Years
T. ia ilities
T. Assets
De t Rati
31
DEBT TO EQUITY RATIO:
De t T Eq ity Rati T tal ia ilities / toc ol er's Eq ity
For 2008 For 2009 For 2010
Analysis:
y equity ratio was larger than all periods that was 6.38. The dell company has current debt to equity ratio of 4.97 that shows that it is using 4.97 debts in comparison to 1 unit of equity.
y
The company was using high debt financing in 2008 when its debt to
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" !
Years
T. ia ilities
23826
3735
6.38 5.20 4.97
22229 28011
4271 5641
& '
a re o l e r's Eq i ty
De t to eq i ty Ratio
& % $
$#
32
RETURN ON ASSETS:
Return on Assets = Net Income / Avg. Total Assets
Years
For 07-08
Net Income
Avg. Total Assets
Return on Assets 0.111
2947
26598.000
For 08-09 For 09-10
2478
27030.500
0.092 0.048
1433
30076.000
Analysis:
y In 2010, company return on asset was 0.048 that shows it was making 4.8 % returns on its assets.
y
Return on assets ratio shows that it is becoming less efficient in current period than past.
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ACCOUNT RECEIVABLE TURNOVER:
Account Receivable Turnover = Net sales / Avg. Receivable
or 07-08
61133
For 08-09
61101
For 09-10
52902
Analysis:
y The current year¶s accounts receivable ratio is 7.06 that show companies sales are more than 7 times of its accounts receivable.
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(
Years
Net ales
A/R. Turnover
6922.5
8.83
41.3314
7068
8.64
42.2222
7495.5
7.06
51.7156
0)
Avg. Receivable
a s
1
34
y The ratio was decrease in the current year because of its low amount of sales than past. y The past record shows that company is unable to properly sale its products.
INVENTORY TURNOVER:
Inventor Turnover = CG/Avg. Inventor
Years
C.G.S
For 07-08
48855
920
53.10
For 08-09
49375
1023.5
48.24
For 09-10
42789
959
44.62
Analysis:
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2
Avg. Inventor
Invent Turnover
a s
6.87
7.57
8.18
35
y The company current ratio of 44.62 is too less than 53.10 of 2008, that shows the company is inefficient to convert its inventory into finished items that are sold.
NET PROFIT MARGIN:
Net Profit Margin = Net Income / Net Sale X 100
Years
For 2008
Net Income
2947
Net Sales
61133
Profit Margin
4.821
For 2009
For 2010
2478
1433
61101
52902
4.056
2.709
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Analysis:
y Current net profit margin of dell is 2.709% that shows that it is earning less than 3 dollars on the sales of 100dollors. y The reason for lowering the net profit margin is low sales and also a minimum net income in the current period.
GROSS PROFIT MARGIN:
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Gross rofit Margi = Gross Profit / Net sales x 100
Years For 2008 For 2009
For 2010
Net sales
61133
61101 52902
12278
11726 10113
20.084 19.191
19.116
Analysis:
y Current gross profit margin of dell is 19.116 that shows that its profit profit is more than 19% of its sales. y The current gross profit margin is less than past years because of decrease in its sales and gross profit.
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4
Gross Profit
Gross Profit Margi
38
DELL HALLMARKS
y Dell has become world¶s largest pc maker in the world.
y Dell has built a brand image in a short period.
y Dell is the first company to cut out retailer from its operations.
y Dell has flexibility in its operations to prepare custom design products.
y Dell has opened its manufacturing plant in areas with cheap labor.
y
In 2008, annual sales hit a record of 55.91 billion dollar.
FUTURE STRATEGY OF EXPANSION
y Dell is to focus its mergers and acquisitions strategy on buying IT services firms. y Dell plans will drive an expansion of its services globally.
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y The PC maker would not necessarily focus on large acquisitions. "Services expansion on a geographic basis is a priority. China is high on that list. y Dell will open a manufacturing and customer support center in Chengdu, situated in Western China. Dell expects the unit to be operational by fiscal 2011 and create 3000 job opportunities.
y
Dell built its reputation as a leading technology provider through listening to customers and developing solutions that meet customer needs. Dell focused on providing long-term value creation through the delivery of customized solutions that make technology more efficient, more accessible, and easier to use.
DELL S PATTERN OF SHARE HOLDING & MOJOR SHAREHOLDERS
EQUITY AND DEBT
DELL
Type
Mil USD
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Equity Debt
6,813.0 5,994.0
MAJOR DIRECT HOLDERS
Holder DELL MICHAEL S ALTABEF PETER GARRIQUES RONALD ROSE RONALD CARTY DONALD J
Reported Dec 17, 2010 Nov 3, 2010 Mar 12, 2010 May 15, 2010 Aug 14, 2010
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TOP INSTITUTIONAL HOLDERS The main institutional share holders of dell are given as follows.
Holder SOUTHEASTERN ASSET MANAGEMENT, INC. AXA VANGUARD GROUP, INC. (THE) STATE STREET CORPORATION INVESCO Ltd. Blackrock Institutional Trust Company, N.A. MACKENZIE FINANCIAL CORPORATION PRICE (T.ROWE) ASSOCIATES INC THORNBURG INVESTMENT MANAGEMENT INC. FRANKLIN RESOURCES, INC
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LONGLEAF PARTNERS FUND 44,277,665 VANGUARD TOTAL STOCK MARKET INDEX FUND VANGUARD 500 INDEX FUND SPDR S&P 500 ETF Trust 19,010,887 15,385,333 12,772,640
VANGUARD INSTITUTIONAL 12,426,651 INDEX FUNDINSTITUTIONAL INDEX FD THORNBURG VALUE FUND OAKMARK SELECT FUND IVA Fiduciary Tr-IVA Worldwide Fd HUSSMAN INVESTMENT TRUST-HUSSMAN STRATEGIC GROWTH FUND 11,801,700 7,113,000 7,112,070
7,000,000
0.36
90,790,000
Sep 30, 2010
INCREASE OR DECEREASE IN THE VALUE OF SHARE OF DELL FOR PAST 5 YEARS
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Here are given the price value fluctuation of Dell inc of last 5 years.
Date:
OPEN
HIGH
LOW
Dec 1, 2010
13.47
17.52
11.34
Dec 1, 2009
14.13
17.26
7.84
Dec 1, 2008
10.94
26.04
9.74
Dec 1,2007
24.60
30.77
21.61
Dec 1, 2006
27.08
32.24
18.95
EARNING PER SHARE RATIO OF DELL:
Earnings per share (EPS) is the amount of income that "belongs" to each share of common stock. An important tool for investors, EPS is often used in determining the value of a stock.
Earnings per share ratio of the dell for the last 5 years are as follows.
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YEARS
2006: 0.44
E P.S.
2007
0.33
2008
0.30
2009
0.19
2010
0.17
TAXES AND DUTIES PAID BY DELL TO GOVT
YEAR
2010
TAX RATE
29.2%
2009
25.4%
2008
23.0%
Dell paid tax at the rate of 29.2%, 25.4%, and 23.0% for Fiscal 2010, 2009, and 2008, respectively. The differences
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Between the effective tax rate of Dell and the U.S. federal statutory rate of 35% principally result from our geographical distribution of taxable income and permanent differences between the book and tax treatment of certain items.
Dell is currently under income tax audits in various jurisdictions, including the United States. The tax periods open to examination by the major taxing jurisdictions to which we are subject include fiscal years 1997 through 2010..
COMPENSATION PATTERN FOR CEO & EMPLOYEES
BASE SALARY Dell¶s philosophy is that base salaries should meet the objectives of attracting and retaining the executive officers needed to run the business. Base salaries are targeted at market median levels, although each executive officer may have a base salary above or below the median of the market. Actual individual salary amounts are not objectively determined, but instead reflect the Committee¶s judgment with respect to each executive officer¶s responsibility, performance, experience and other factors, including any retention concerns, the individual¶s historical compensation and internal equity considerations. Generally the Named Executive Officer base salaries range from $675,000 to $950,000. During Fiscal 2009, the Committee carefully considered the input and recommendations of Mr. Dell as Chairman and Chief Executive Officer when evaluating factors relative to the other executive officers in order to approve salary adjustments
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COMPENSATION FOR EXECUTIVE
PROCESS ± When making individual compensation decisions for executive officers, the committee takes many factors into account, including the performance of the company overall; the recommendation of the Chairman and Chief Executive Officer (except for decisions relating to his own compensation); the individual¶s performance and experience; the individual¶s historical compensation; comparisons to other executive officers (both those of the company and those of Dell¶s peer group); and any retention concerns if relevant.
COMPENSATION CONSULTANTS ± The charter of the Leadership Development and Compensation Committee authorizes the Committee to engage independent consultants at any time at the expense of the company, but did not engage independent consultants in Fiscal 2008. The Committee periodically evaluates the need to engage outside consultants.
ELEMENTS OF THE TOTAL COMPENSATION PACKAGE ± The key elements of the compensation program for our executive officers are base salary, annual incentive bonus, long-term incentives and benefits and perquisites.
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EXECUTIVE COMPENSATION PHILOSOPHY AND CORE OBJECTIVES
We seek profitable revenue growth in a highly competitive industry that includes several other large branded competitors as well as a number of smaller branded and generic competitors. Our business strategy is evolving as we combine our direct customer model with relevant technologies and solutions, highly efficient manufacturing and logistics, and new distribution channels to reach commercial customers and individual consumers around the world. Accordingly, the Board and the Chief Executive Officer have defined the following four multi-year strategic corporate priorities:
GLOBALIZATION ² Focus on accelerating profitable revenue growth in
developing areas of the world;
PRODUCT LEADERSHIP ² Design and innovate around non-proprietary
standards-based technologies to offer customers what they want, when they want it, and at a level of value they consider to be unparalleled;
CUSTOMER EXPERIENCE
Focus on product quality and customer service to instill customer satisfaction, trust, and loyalty; and
WINNING CULTURE ² Recruit and develop a diverse workforce globally
and provide a positive work environment, including recognition based on
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merit, a focus on customer commitment, the highest standards of integrity and ethical behavior, and community leadership.
The Leadership Development and Compensation Committee is committed to and responsible for designing, implementing, and administering a compensation program for executive officers that ensures appropriate linkage between pay, company performance, and results for shareholders. The committee seeks to increase shareholder value by rewarding performance with cost-effective compensation and ensuring that we can attract and retain the best executive talent through adherence to the following core compensation objectives:
Providing compensation commensurate with the level of success achieved, ranging from above-average overall rewards for performance that exceeds that of our peers to below-average compensation for below-average performance;
Providing a total compensation opportunity that is competitive with similar high-tech and other large global general industry companies that we compete with for talent;
Managing fixed costs by combining a conservative approach to base salaries
and benefits, with more aggressive performance-dependent short- and longterm incentives;
Recognizing and rewarding the achievement of corporate, regional/business
unit and individual performance goals; and
Heavily weighting the compensation package towards long-term, performance-dependent incentives to better align the interests of executives with shareholders.
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CRITICISM FACED BY DELL INC... ON COMPENSATION ISSUE :
y One of the main question raised by share holders is that when Dell's stock has gone down, why does it look like the overall compensation of the company's executive team gone up this year? y The most contentious question raised at Dell's annual shareholder meeting. An investor who didn't identify himself asked politely why, when gross margins, operating margins, earnings per share, and market share had declined in 2009, it looked as if executives were getting more in return. y Shareholders who held stock for 12 months lost half their money," the man said from the Austin, Texas, audience. "Stock was down 50 percent, thousands of employees were laid off. Yet I see in most cases, executive compensation is up, in some cases significantly. I'm just trying to understand how something like that can be justified, given that shareholders and employees have suffered so much." y Another investor, Scott Adams of the American Federation of State County and Municipal Employees Pension Plan, rose to ask why Michael Dell's personal security costs the company $1.1 million. "We believe this is excessive," he said. "Only Larry Ellison at Oracle as higher security costs."
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REASONS FOR COMPENSATIONS
y The director of Dell investor relations, Rob Williams, defended the company's performance and tried to put it in context, saying last year was a "shock to global economic markets, and spending for IT hardware declined at a pace that was unprecedented in this company's 25-year history." y Williams pointed out that no top executives, including Chairman and CEO Michael Dell, received pay increases. Dell also did not take a bonus the past two years or get any extra stock, he said. Other executives may have received bonuses "related to their hire" or received company shares as part of a previously arranged grant.
y The answer given by Rob Williams on the issue that why so much huge amount has been spended on the personal security of the Michael Dell is that Michael is a public figure and the board is ready to bear the expenses occurs on the security of Michael.
SOCIAL RESPONSIBILITY OF DELL
The company is fulfilling social responsibilities in a nice way. it is committed to take every step for public welfare. Some of them are mention below.
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RESPONSIBLE OPERATIONS y Dell helps customers do more to reduce, reuse and recycle. Select products are made with recycled materials, and all Dell products can be recycled through recycling programs. y as of January 31,2010, Dell has recycled 484 million pounds (220million kilograms) of equipment since 2006. y Consumers can now recycle computer equipment through our extensive free and convenient computer recycling program in more than 70 countries around the world.
y Introducing packaging solutions for the planet to eliminate the waste created by dell products y It created a metric for packaging improvement. It¶s called the 3 Cs: y Cube ² reduce the size y Content ² use recycled or sustainable materials y Curb ² ensure that it is easily recyclable BAMBOO PACKING
y Dell uses bamboo packing material to reduce its dependence on artificial paper and foams that are a big reason of creating pollution. y In November 2009, dell became the first technology company to offer bamboo packaging For products. In fact, more than 50 percent of dell Inspiring platforms are packaged in bamboo.
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Using greener materials, offering greener products dell is focusing on producing only environment friendly products.
In 2010, dell changed all of our new laptop displays to light-emitting diode (LED), which eliminates the use of mercury. And Is also committed to expanding the list of mercury-free, LED-based products in Future offerings.
The plastic materials used in select mainstream OptiPlex systems and monitors in 2009 included more than 7.2 million pounds of post-consumer recycled plastic. That¶s equivalent to recycling More than 263 million water bottles.
By the end of 2011, all newly introduced Dell personal computing products will be free of PVC, BFRs and chlorinated flame retardants (CFRs). However, achieving this goal is contingent on when the industry identifies acceptable alternatives that will lower product health and environmental impacts without compromising product performance.
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Dell is proactively eliminating the four chemicals expected to be restricted when RoHS is updated around 2014: hexabromocyclododecane (HBCDD), bis(2ethylhexyl)phthalate (DEHP), butyl benzyl phthalate (BBP) and dibutyl phthalate (DBP
DRIVING ENERGY EFFICIENCY
fiscal year 2010, dell had more than 135 products registered for Electronic Product Environmental Assessment Tool (EPEAT). dell laptops and desktops are being designed to consume up to 25 percent less energy by the end of calendar year 2010 compared to systems offered in May 2008. Dell estimates that customers using desktop power management features and settings have saved a total of more than $4 billion on energy costs.
. In
REDUCING ENERGY CONSUMPTION;
Dell is committed to reduce power consumption in its projects.
During the last three years, Dell has completed more than 170 improvement projects in its facilities. These upgrades are estimated to reduce energy usage by 36 million kWh, avoid generating 21,000 metric tons of greenhouse gas (GHG) emissions, and save roughly $5.8 million each year. As a result of virtualization, by the end of 2009, Dell¶s internal IT organization saved enough
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Electricity annually to power roughly 2,000 average American homes for one year..
By applying our ³green efficiency´ approach, Dell IT has achieved more than $29 million in energy savings to date and indefinitely postponed the need to build a new data center to support our internal operations.
ENVIRONMENTAL MANAGEMENT SYSTEMS
Dell maintains ISO 14001:2004 certification in most of its manufacturing operations worldwide. Our global product development and takeback/ recycling programs also are certified to ISO 14001. FOREST PROTECTION: dell is continuing its efforts to reduce the use of virgin tree fiber and increase the use of forest-friendly paper.
DELL COMMITMENT TO COMUNITIES
Dell is committed to society to a great extent.there are many programs that show the progress of dell to achieve its goals. FUNDS RAISED FOR CHILDREN; y In 2008, DELL set an inspirational goal to give back 1 percent of our annual pre-tax profit to our communities. Building a better tomorrow through education:
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y . TERI addresses rising global concerns through innovative and sustainable solutions. Working with TERI, the Dell Youth Connect program reaches more than 300 schools and 30,000 students across India
y
1 Million Children Positively Impacted by Dell's Giving Programs Last Year
y
Free Consumer Recycling Program Has Collected 484 Million Pounds of Equipment since 2006
y
Dell Became First to Add Sustainable, Compostable Bamboo to Packaging Line-up
y
Energy Efficiency Initiatives Helped Dell Reduce Emissions 10 Percent over Previous Year
y
Dell Spent More Than $1 Billion with Women- and Minority-Owned Suppliers in 2009
y The News: Dell announced the progress it's made against its social responsibility, philanthropic and environmental stewardship initiatives today with the release of its fiscal year 2010 corporate responsibility summary report. Dell defines corporate responsibility as achieving business objectives in a way that honors ethical values, respects the dignity of people and preserves the natural environment. Such responsible operations are integral to the company's purpose of helping people everywhere to grow and thrive.
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In a continued effort toward transparency, Dell has provided updates on 77 measurable indicators of corporate responsibility in this year's summary report, up from 32 in last year. The report includes the following highlights:
y
Dell contributed 1.4 percent of total revenue through its corporate giving efforts and the Dell Foundation, exceeding its 1 percent annual giving goal.
y
1 million children have been positively impacted by Dell's giving programs in fiscal year 2010. These include children participating in Youth Connect, Dell's education program that partners with nongovernmental and nonprofit organizations to help close the technology gap and unleash student potential.
y
As it works to make "being green" easy and cost-effective for customers, the company reported that since 2006, it has collected for responsible recycling about 484 million pounds (220 kilograms) of computer equipment, enough to fill more than 1,600 freight cars. Dell offers free, convenient recycling of PCs and related accessories to consumers around the world.
y
Dell ended fiscal year 2010 well on track - at 44 percent - to meet its goal of eliminating the use of approximately 20 million pounds of packaging materials by 2012. Dell also became first in the PC industry last year to create packaging from bamboo, a rapid renewable that customers can add to their compost piles for convenient, responsible disposal.
y
Dell also continues its focus on environmental stewardship in its operations and supply chain. The company reduced the indirect emissions associated with its energy use by 10 percent in fiscal year 2010, and it works to have its top suppliers report their greenhouse gas emissions through the Carbon Disclosure Project. Additionally, Dell is reducing the impact of employee commutes by introducing more flexible work solutions, which 21 percent of Dell employees worldwide say they have embraced.
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CLOSING THE TECHNOLOGY GAP IN THE U.S.
Dell Foundation awarded grants in the U.S. In fiscal year 2010, the Dell Foundation awarded 82 Equipping Youth Grants and more than 100 open grants, ranging in value from $1,000 to $10,000, in Communities where Dell has facilities. Equipping Youth grants are two-year affiliations with nonprofit organizations. The grants offer direct financial assistance to programs that empower youth to learn and excel in a digitally driven economy. Dell provides three types of Equipping Youth grants: Healthy Communities, Connected Communities and Literate Communities.
GLOBAL H.I.V AWARNESS PROGRAM OF DELL INC :
The management of Dell inc are doing a tremendous efforts to spread globally an awareness program about HIV& AIDS. Which is spreading very fastly specially in Asian countries. As in Asia the main market of Dell is India and in India almost 2.5 million people are effectives of HIV. Dell wants to keep safe all of its community from the harmness of HIV.
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CODE OF CONDUCT LAID DOWN BY DELL S MANAGEMENT: Dell¶s code of conduct is the global set of guidelines articulating Dell¶s standard of ethical behavior. The code of conduct provides guidance to ensure that Dell meets the highest standard and doing in the right way , wining with integrity Dell code of conduct is consistent globally and available in 17 languages. Before an employee starts work at Dell he is been clearly informed about the code of conduct of Dell.
DELL INC. IS WORKING FOR THE EDUCATION: y Dell inc. is very committed to work with the help of UNITED STATES to provide primary education universally by 2015. y Dell announced today its commitment to give $10 million in cash and Dell technology towards education technology initiatives in 2011 in connection with the United Nations Private Sector Forum on the Millennium Development Goals y One of several examples of Youth Connect projects is with UNICEF Morocco where the Moroccan Ministry of Youth and UNICEF provides technology access to 6,000 young people in some of the most vulnerable and disadvantaged areas of the country. Also, Dell volunteers train young Moroccans to develop their IT skills, helping to increase their employability y The company also donated $20,000 to the Junior Achievement program in Edmonton last year to sponsor programs in four local schools, and provides ongoing volunteerism and financial support to the Edmonton Food Bank, Habitat for Humanity and other local non-profit organizations. ETHICS AND VALUES y The Board and management are jointly responsible for managing and operating Dell¶s business with the highest standards of responsibility, ethics and integrity. In that regard, the Board expects each director, as well as each member of senior management, to lead by example in a culture that emphasizes trust, integrity, honesty, judgment, respect, managerial courage
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and responsibility. Furthermore, the Board expects each director and each member of senior management to act ethically at all times and to adhere to the policies, as well as the spirit, expressed in Dell¶s Code of Conduct. No waiver of the Code of Conduct for a director or executive officer shall be permitted without the approval of the Board.
ENVOIRMENTAL GREENING PROGRAM: y Company Launches New Zero Carbon Initiative for Long-Term; 'Plant a Tree for Me' Program Now Available in Europe
CORPORATE GOVERNENCE PRACTICES PERFORMED BY DELL INC..
CORPORATE GOVERNANCE PRINCIPLES The Board of Directors (the "Board") of Dell Inc. ("Dell"), as representatives of the stockholders, is committed to the achievement of business success and the enhancement of long-term stockholder value with the highest standards of integrity and ethics. In that regard, the Board has adopted these principles (these "Principles") to provide an effective corporate governance framework for Dell, intending to reflect a set of core values that provide the foundation for Dell¶s governance and management systems and its interactions with others.
ROLES OF BOARD AND MANAGEMENT
ROLE OF BOARD OF DIRECTORS ² It is the responsibility of the Board to direct, guide and oversee the conduct of Dell¶s business and to promote the interests of Dell's stockholders. In carrying out that responsibility, the Board considers its primary functions (which, to the extent permitted by applicable law and deemed appropriate by the Board, may be delegated to committees of the Board) to include the following:
y
MANAGEMENT PLANNING AND OVERSIGHT ² Selecting, and upon the recommendation of the Leadership Development and Compensation Committee,
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y
y y
y
y
evaluating and approving the compensation of Dell's Chief Executive Officer ("CEO") and planning for CEO succession; providing counsel and oversight in the selection, evaluation and compensation of, and succession planning for, Dell¶s Executive and Senior Vice Presidents and individuals designated as Section 16 Officers under the federal securities laws, and providing counsel and oversight in the evaluation and compensation of Dell's other executive officers. STRATEGIC AND OPERATIONAL PLANNING ² Reviewing, understanding and approving Dell's long-term strategic plans and annual operating plans, and monitoring the implementation and execution of those plans. MAJOR CORPORATE ACTIONS ² Reviewing, understanding and approving Dell's significant financial and business transactions and other major corporate actions. FINANCIAL REPORTING ² Reviewing, understanding and approving Dell's financial statements and reports, and overseeing the establishment and maintenance of controls, processes and procedures to promote accuracy, integrity and clarity in financial and other disclosures. GOVERNANCE, COMPLIANCE AND RISK MANAGEMENT ² Overseeing the establishment and maintenance of Dell's governance and compliance processes and procedures to promote the conduct of Dell's business with the highest standards of responsibility, ethics and integrity. GENERAL ADVICE TO MANAGEMENT ² Providing general advice and counsel to Dell's Chairman, CEO and senior management in connection with issues arising during the course of managing Dell's business.
BOARD COMPOSITION AND STRUCTURE
y
GENERAL QUALIFICATIONS ² Each director should have demonstrated
y
notable or significant achievements in business, education or public service; should possess the requisite intelligence, education, experience and judgment to make a significant contribution to the Board and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and should have the highest standards of ethics and integrity, a strong sense of professionalism and an intense dedication to serving the interests of Dell's stockholders. The Board shall adopt a specific Director Nomination Policy. Once adopted, the Director Nomination Policy shall be considered an integral part of these Principles. INDEPENDENCE ² The Board believes that its primary function is to manage Dell¶s business in a manner consistent with the best interests of the stockholders, and that those interests are best served by having a substantial
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number of objective, independent directors on the Board. Consequently, at all times, at least 60 percent of the directors will be "independent." For this purpose, a director shall be considered "independent" only if the Board affirmatively determines that the director does not have any direct or indirect material relationship with Dell that may impair, or appear to impair, the director¶s ability to make independent judgments and the director otherwise satisfies the standards of "independence" applicable to directors of NASDAQ-listed companies. In connection with the Board's assessment and determination of each director's independence, the Board shall broadly consider all relevant facts and circumstances and shall apply the following standards: (a) A director will not be considered "independent" if any of the following conditions exist at the time of determination: (1) The director is, or at any time during the past three years was, employed by Dell; (2) The director accepted or has a family member who accepted any compensation from Dell in excess of $120,000 during any period of 12 consecutive months within the past three years, other than the following: (i) Compensation for Board or Board committee service, (ii) Compensation paid to a family member who is an employee (other than an executive officer) of Dell, or (iii) Benefits under a tax-qualified retirement plan or non-discretionary compensation; (3) The director is a family member of an individual who is, or at any time during the past three years was, employed by Dell as an executive officer; (4) The director is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which Dell made, or from which Dell received, payments for property or services in the current or any of the past three fiscal years that exceed 5 percent of the
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recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than the following: (i) Payments arising solely from investments in Dell's securities, or (ii) Payments under non-discretionary charitable contribution matching programs; (5) The director is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of Dell serves on the compensation committee of such other entity; or (6) The director is, or has a family member who is, a current partner of Dell's outside auditor, or was a partner or employee of Dell's outside auditor who worked on Dell's audit at any time during any of the past three years. For purposes of the above, "immediate family member" includes spouse, parents, children, siblings, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law and other persons living in the director's home (not including employees of the director). (b) The following relationships will not, in and of themselves, be considered material relationships that would impair, or appear to impair, a director¶s ability to make independent judgments and, therefore, will not alone prevent the director from being considered to be "independent": (1) The director is an executive officer of a company that does business with Dell and the other company¶s annual sales to, or purchases from, Dell are less than 1 percent of Dell¶s annual revenues and less than 1 percent of the annual revenues of the other company; (2) The director is an executive officer of a company that is indebted to Dell or is an executive officer of a company to which Dell is indebted and, in either case, the aggregate amount of such debt is less than 1 percent of Dell¶s total consolidated assets and less than 1 percent of the total consolidated assets of the other company;
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(3) The director serves as an executive officer, director or trustee of a charitable organization to which Dell or any of its directors or executive officers contributes and the combined annual contributions to such organization by Dell and its directors and executive officers are less than 1 percent of that organization¶s total annual charitable receipts; (4) The director or an immediate family member of the director has a direct or indirect interest in a transaction in which Dell is or is proposed to be a participant under circumstances (e.g., the amount involved in the transaction does not exceed $120,000.00 or the interest of the director or his/her immediate family member is immaterial) that do not require disclosure pursuant to Item 404 of SEC Regulation S-K; and (5) Any relationship that is similar to, but more attenuated than, any of the relationships described above.
CORRUPTION & FRAUD COMIITED BY DELL INC
NEW YORK COURT FIND GUILTY DELL :
y Dell had been found guilty for the fraud of false advertisement , deceptive business practices and abusive debt collection practices in a case brought by the New York attorney general. y The court also found fault with Dell support. For example: "Subscribers to a 'next-day' repair service sometimes waited as long as a year for support, the court found
NEW YORK SUES FOR DELL FRAUD:
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The New York attorney general has filed a lawsuit charging that Dell used fraud and false advertising to increase profits on PC sales. The lawsuit alleges that Dell misled its customers by applying high credit rates to their computer purchases although it had promised cheap financing. The suit also alleges that Dell failed to deliver rebates, warranties and technical support as simply as it had promised, according to the lawsuit filed Tuesday in Albany County Supreme Court by New York state Attorney General Andrew Cuomo.
DELL WILL SETTLE OVER ACCOUNTING FRAUD:
Dell and its founder Michael have agreed to pay over 100 million in penalties to settle charges of accounting frauds brought over by s.e.c. The U.S. Securities and Exchange Commission probe into the company and chairman Michael Dell, which has been previously disclosed, alleged that Dell "failed to disclose" payments from Intel to use its processors and "materially misrepresented" the reasons for its improving profitability "The board believes that this settlement is in the best interest of the company, its customers, and its shareholders, as it brings a five-year SEC investigation to closure," Sam Nunn, Dell's presiding director, said in a statement, adding that the Dell board unanimously supports chairman and CEO Michael Dell After an internal review that was completed in 2008, the company acknowledged accounting irregularities, and it adjusted its financial results from between 2003 and the first quarter of 2007.
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DELL REACHES SETTLEMENT WITH SECURITIES AND EXCHANGE COMMISSION:
Dell Inc. today announced that it has reached a settlement with the U.S. Securities and Exchange Commission (SEC) resolving the previously-disclosed SEC investigation into Dell s disclosures and alleged omissions prior to Fiscal 2008 regarding certain aspects of its commercial relationship with Intel Corporation and into separate accounting and financial reporting matters. The settlement terms are consistent with the settlement framework disclosed by the company on June 10, 2010. The SEC has agreed to settlements with both the company and Michael Dell, the company s chairman and CEO. The company and Mr. Dell entered into the settlements without admitting or denying the allegations in the SEC s complaint, as is consistent with standard SEC practice. The settlements with the company and Mr. Dell are subject to approval by a U.S. District Court. The SEC's complaint filed with the U.S. District Court today alleges that the company engaged in disclosure and accounting practices that violated certain federal securities laws and SEC rules (including antifraud provisions) during the period from 2001 to 2006. Under its settlement, the company has consented to a permanent injunction against future violations of such federal securities laws and SEC rules. The company also has agreed to perform certain undertakings, including retaining an independent consultant, to enhance its disclosure processes, practices and controls. The company s settlement requires it to pay a civil monetary penalty of $100 million. As announced in June, in its first quarter of Fiscal 2011 the company established a reserve in that amount for the potential settlement of the SEC
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investigation. The SEC s allegations with respect to Mr. Dell and his settlement are limited to the alleged failure to provide adequate disclosures with respect to the company s commercial relationship with Intel prior to Fiscal 2008. Mr. Dell s settlement does not involve any of the separate accounting fraud charges being settled by the company and others. Moreover, Mr. Dell s settlement is limited to claims in which only negligence, and not fraudulent intent, is required to establish liability, as well as secondary liability claims for other non-fraud charges. Under his settlement, Mr. Dell has consented to a permanent injunction against future violations of these negligence-based provisions and other non-fraud based provisions of certain federal securities laws and SEC rules. In addition, Mr. Dell has agreed to pay a civil monetary penalty of $4 million. The settlement does not include any restrictions on Mr. Dell s continued service as an officer or director of the company. Sam Nunn, presiding director of the Dell Board, said, The Board believes that this settlement is in the best interest of the company, its customers and its shareholders, as it brings a five-year SEC investigation to closure. Dell s Board reaffirms its unanimous support for Michael Dell s continued leadership, and the management team in its ongoing commitment to transparent accounting, integrity in financial reporting and strong corporate governance." Mr. Dell said, We are pleased to have resolved this matter. We are committed to maintaining clear and accurate reporting of our periodic results, supporting our customers, and executing our growth strategy.
EFFECTS OF THESE FRAUDS ON SUBSEQUENT PROFIT & REPUTATION:
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As it was shown very clearly in the figures that since these scamps and frauds taken place in Dell inc , its market value gone towards shrink.. its Earning Per Share ratio is continuously on decrease from 2006. The share value of Dell also decreased from $30.05 to 14.02 currently. By comparison of its financial ratios from previous years it is very easy to understand that company worth is going towards lower side. And these frauds are the major factors that investors had loser their trust on this company.
COMSATS INSTITUTE OF INFORMATION AND TECHNOLOGY ISLAMABAD