Cases 1-4

Dell Inc.
Zach Neal
November 29, 2015

Note: Dell Inc. went private late in 2013. The financial information
obtained was from year end 2013 gathered from multiple sources.

Vision
Its the way we do business. Its the way we interact with the community.
Its the way we interpret the world around us-our customer 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.

Mission
Dells 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. (Company Documents) (Text Book)

Compa

Custom

Produ

Mark

Technol

Concern

Philoso

Self-

ny

ers

cts or

ets

ogy

for

phy

Conce rn for

Servic

Survival,

es

Growth

pt

Conce

Public
Image

and
Profitabi
lity
Dell

YES

YES

YES

YES

YES

YES

YES

Inc.

This mission statement contains eight of the nine mission statement

components. In the case of customers it mentions how they will meet
customer expectations and also giving them the best customer experience.
For products and services the mission statement mentions that they will
have best-in-class service and support. They say that they will be the most
successful computer company in the world which covers the market portion
of the components. For the technology portion it mentioned that they will
have leading technology in their field.
Growth and profitability are covered in the last line of the mission statement
where it says financial stability. I believe that everything in the mission
statement is their philosophy, every word that is in it tells what they are
about. The major competitive advantage that Dell Inc. has that is mentioned
is they will have leading technology, flexible customization capability and
best-in-class service and support. I believe superior corporate citizenship

YES

is their concern for public image. This means that they want their business
to fit in with the rest of the citizens. The only component that is not
mentioned is concern for employees, not once in the mission statement do
they bring up their employees at all.

Milestones
Founded in 1984 by Michael Dell with a $1000 initial investment
Sales grew to $3.4 billion in 1995
Dells stock is currently selling at $44 per share down from $100 per share in
2006 because a large fine by the Securities and Exchange Commission
Dell changed business structure in 2010 to four new business units to
improve customer service
Newsweeks Greenest company in 2010

KEY INTERNAL FACTORS

Strengths

Direct Sales Method (No Middle Man)

.60

.15

Second Largest PC Maker in the World

.36

.12

Growing amount of employees (Better Customer Service) 3

.24

.08

Global Recycling Program

.06

.18

Less overhead with Direct Sales Method

.15

.05

Product customization; built for each customer

.12

.04

.25

Weaknesses
Late into the market causing low profit margins
.25
60% of Employees work outside U.S.
.1

.1

Outsourcing more of its work to keep up globally

.18

.09

80% of sales to Corporate and Govt

.10

.05

Difficult to just buy a Dell

.02

.01

KEY EXTERNAL FACTORS

Opportunities
Grow in the consumer market (Students and Families)
.56
Bring more employees to the states
.3

4
3

.14
.1

Maintain its position in its market

.24

.08

Grow sales in developing countries in Europe and Asia

.21

.07

Set lower prices to exceed HP in sales

.12

.06

Increased demand of laptops

.10

.05

Threats
Growing competition
.84

.21

Growth rate of the market

.1

.3

Labor Costs

.08

.24

Demand for perfect product

.12

.06

Rapidly increasing technology

.10

.05

SWOT Analysis

Strengths
Direct Sales Method For the direct sales method strategy that Dell uses
there is no middle man. This is the number one strength of the company in

my eyes. They dont sell directly to their customers which takes away a lot
of overhead costs.
Second Largest PC Maker in the World - In an ever growing market like
technology to be ranked number two in the world in PC making is a huge
strength. They still have Apple behind them for the time being and apple is
growing amongst college aged students.
Growing Number of Employees Dell increasing there number of employees
by changing some strategies is another very important strength. This
increase will help with better customer service and area that will help in
keeping Dell towards the top in sales worldwide.
Global Recycling Program - Another fantastic program that Dell runs, this
program allows for consumers to rid themselves of old Dell product as they
are getting new product. This is extremely innovative on the part of Dell.
Product Customization - This is the final key strength in the IFE matrix and is
also very important. Dell is built to order so therefore each PC is build
custom for the consumer. This is a big strength because each consumer can
get exactly what they want.
Weaknesses
Late into the Market - Dell has been known to wait for the market to be set
before they dive in. This is a very conservative approach and therefor their
profit margins will suffer.

60% of Employees Outside of US - This weakness is big because of the

amount of U.S. sales that they do. If they dont employ many Americans
then some Americans will be hesitant to purchase the product.
Outsourcing Recently, Dell has begun to outsource more of its PC building.
This is to keep up with the global market. In doing so Dell will give up some
of its power in the day to day building of their products.
80% of Sales 80% of Dells sales are to government and corporate
business. This is a weakness because they need more of their sales to go to
everyday people. They are losing this market to other brands.
Difficult to just buy Dell is difficult to just go and purchase because of all
of the customization. Right now Dell is set up for large corporations to
purchase instead of the everyday consumer.
Opportunities
My number one opportunity for Dell in the future is to grow with the college
aged students. This is a market that they could take back over from HP and
Apple.
The number two opportunity for Dell would be to bring more of their
employees back to the states. 60% is too many with as much sales as they
do in the states. If they decrease that number maybe the sales numbers will
increase even more because of a sense of pride.

The third opportunity for Dell is just to maintain. It isnt always the sexy
thing to do but if they were to maintain their position they would still be
second to only HP. This isnt the worst position to be in and for a 30+ year
old company they could be happy there.
Another opportunity for Dell would be to grow sales in developing countries
in Europe and mostly Asia. Asia is booming in the technology market
currently and there are sales to be had.
The increase demand for Laptops is another opportunity for Dell. People are
going away from the normal desktop computer to the more convenient
laptop and this is a huge opportunity for Dell to be the leader in this market.
Threats
Growing Competition More and more companies are trying their hand in PC
making and a couple are very popular with the younger generation. The way
people use Apple products is only making them more of a threat to
companies like Dell.
Growth Rate of the Market The market isnt growing at a very fast rate.
People are spending less on things like laptops and therefore sales are
slowing.
Labor Costs Coming out of the recession of 2008 people are now
demanding more of what they are worth when it comes to their wage. You
can no longer underpay a qualified worker.

Demand for Perfect Product With all of the competition in the field people
want the perfect product. One of the companies will have that and it might
not be Dell. People may not always be loyal to the brand when they want
the perfect product for themselves.
Rapidly Increasing Technology Technology is getting better and better by
the second. There is always something new on the shelves which will date
the current products even faster. The product life cycle continues to get
shorter.
Industry Analysis
Porters Five-Forces Model of competitive analysis can show us the
nature of competitiveness in a given industry (David, 2012, p. 75). The five
forces analyzed are rivalry among competing firms, potential entry of new
competitors, and potential development of substitute products, bargaining
power of suppliers, and bargaining power of consumers (David, 2012, p. 75).
There are three steps for using this forces model that can help companies
analyze the competition and see if the company can still make a decent
profit. The three steps are:
1) Identify key aspects or elements of each competitive force that impact
the firm.
2) Evaluate how strong and important each element is for the firm.
3) Decide whether the collective strength of the elements is worth the
firm entering or staying in the industry.
(David, 2012, p. 76)

Rivalry Among Competing Firms

HP, Lenovo, Acer and Apple are Dells biggest competitors in a very
competitive industry. The biggest hurdle in the PC industry is developing a
low-cost, highly efficient product and all of these firms are striving for the
same thing. In an industry where being in at the forefront of new technology
is the key Dell has not always been able to in recent years. In the five years
leading up to 2011, Dell Inc. has grown at 1.97% annually far below the
industry average of 33.38% (David, 2012, p. 257). Competing firms have
grown at a rapid pace with new products such as laptops, tablets and smart
phones as Dell has continued to not invest in new technology (David, 2012,
p. 258).
Potential Entry of New Competitors
The potential entry of new competition in the computer industry is not
very high. The firms that currently compete for sales in the industry are very
well established and have a firm grasp on the newest technologies. The top
five competitors in the industry currently have about 61% of the market
share and for a new firm to come and grab some of that they would have to
be extremely competitive in pricing. The current firms are all rather large so
therefore it will be easier on them to have lower prices than any new
company entering the industry.
Potential Development of Substitute Products
The substitute product that causes the biggest threat to the PC
industry is that of the smartphone. These days everybody has a smartphone

and some people even use them instead of their computers at times. Many
people use them to send emails, check for personal information on the
internet and a variety of other reasons. This product is growing by the day
and who knows how important it can become in a persons life.
Bargaining Power of Suppliers
Dell Inc. has over 100 suppliers who supply them with goods and
services including hardware, software and any sort of service they might
need (Supply Chain). The hardware and software of a PC is extremely
important to get right and at any time if a supplier raises its price then Dell
would have to follow suit. PC companies do shop around for different
suppliers based on pricing as well which keeps the market in balance.
Bargaining Power of Consumers
In the PC industry the consumers have a lot of power. There are so
many alternative options to Dell that consumers have the ability to shop
around for the best product for them. The consumer has the option to go
with a different brand (Apple, HP, Lenovo) or a whole different type of
product (Tablet or Smartphone) and with this ability I would conclude their
buying power is strong.

Strengths
1. Direct Sales Method
(No Middle Man)
2. Second Largest PC

Weaknesses
1. Late into the market
causing low profit
margins
2. 60% of employees

Maker in the World

3. Growing Number of
Employees. Better
customer service
4. Global Recycling
Program
5. Product
Customization

work outside of the

United States
3. Outsourcing more of
its work to keep up
globally
4. 80% of sales to
corporate and
government
5. Difficult to Just buy a
dell

Opportunities
1. Grow in the consumer
market (students and
families)

SO Strategies
1. Be the price setter in
the market. Move to
lower prices than the
competition (S1,O5)

2. Bring more
employees to the states

2. Expand to stores
across Europe and Asia
to increase sales in
these markets (S3, O4)

3. Maintain its position

in the market

3. Put in-store
customization centers in
retail stores to increase
popularity with younger
generation (S5,O1)

WO Strategies
1. Develop ready to
go, cheaper products
at retails stores to make
it easier for people to
purchase the product
without having to
customize. (W5, O5)
2. Start a marketing
campaign on social
media to gain support
from younger
generation. (W4, O1)
3. Develop buying plan
to purchase more
products from suppliers
in the United States.
(W3, O2)

ST Strategies
1. Develop a great call
center and have Dell
specialists in inside
retail stores to increase
customer service and

WT Strategies
1. With labor costs
rising and more jobs
being outsourced, crosstrain more employees
so they are more

4. Grow sales in
developing countries in
Europe and in Asia
5. Set lower prices to
pass HP in sales
Threats
1. Growing competition

combat competition.
(S3, T1)

2. Growth-rate of the
market

2. Use the position in

the PC market to launch
new initiatives such as a
student outreach
program to grow the
market as a whole. (S2,
T2)

equipped for more

responsibility keeping
labor costs down. (W2,
T3)
2. Make a simple PC
that does not have to be
customized that is easy
to use for simple tasks
like word processing.
(W5, T4)

3. Labor costs
4. Demand for perfect
product
5. Rapidly increasing
technology

With the immense amount of competition and the rapidly

increasing technology in the PC industry this SWOT Matrix will help Dell to
conclude which strategies are best going forward. I found that an increase in
customer service and developing a relationship with a new market in the
younger generation Dell can catch HP and also put some ground between
them and third place in the market.
Case Statement
Dell Inc. is struggling to maintain its position in their industry because of
their hesitation to enter the market before their competition.
Financial Analysis

Growth Ratios
Sales The most recent growth rate in regards to sales that was found for
Dell Inc. was for the year 2013. Dell had a growth rate of 3.13% Q/Q. The
industry average was -5.26% Q/Q. When compared to the industry Dell is
performing well above the standard. The higher the growth rate the better
the company in performing (Dell Growth Comparisons).
Net Income Dells net income growth rate was 56.92% compared to the
industry average of -16.65% Q/Q for 2013. Dell outperformed the industry
substantially quarter to quarter in 2013. In the previous year Dell had
performed a lot worse with a net income growth rate of -72.13% (Dell Growth
Comparisons).
Dividend The growth rate for dividends for this company is not available,
but the industry average is 2.6% (Dell Growth Comparisons).

Price Ratios
Price/Earnings Ratio - Dell currently has a PE ratio of 18.17 which is about
three times the industry average of 6.7. With a P/E ratio that is that much
higher than the industry investors will be paying more for the potential of
future earnings (Gurufocus).

Price/Sales Ratio - Dells price/sales ratio is .43 compared to the industry

average of 2.68 (Gurufocus).
Price/Book Value Ratio - Dell has a price/book value ratio of 10.62, and
the industrys is -4.1. The price/book value ratio helps give investors a tool
to find undervalued companies (Gurufocus).
Price/Cash flow Ratio - Dells price/cash flow ratio is 6.3. The industry
average for this ratio could not be found. This ratio is similar to P/E ratio,
except this ratio excludes non-cash expenses (Gurufocus).

Profitability Ratios
Gross Margin Dell has a gross margin of 18.53%. The gross profit margin
for the industry could not be found but I have compared the gross margin for
Dell vs the industry leader Hewlett Packard. Hewlett Packard has a gross
margin of 28.37%. Dell is operating below the industry leader in gross profit
margin (Dell).
Pretax Margin The pretax margin for Dell is 5%. The pretax margin for
the industry is unavailable but I compared Dell vs Hewlett Packard. HP has a
pretax margin of 3.37%. The higher the pretax margin the better, and in this
case Dell is outperforming HP (Dell).

Net Profit Margin Dell has a net profit margin of 1.41%, which is below
the industry average of 4%. The higher the percentage the higher the profits
for the company (Dell).

Financial Ratios
Debt/Equity Ratio Dells debt/equity ratio is .63%, while the industry is at
2.23%. While looking at this ratio the smaller the percentage the better off a
company is. The higher the number means that the company has financed
its growth with debt (Gurufocus).
Current Ratio The current ratio for Dell is 1.18%, the current ratio for the
industry was unavailable. When you look at this ratio it is better to have a
higher percentage because it shows that a company can handle short term
obligations more easily (Gurufocus).
Quick Ratio The quick ratio for Dell is 1.12% compared to the industry
average of .43%. A higher percentage here means that a company can
consolidate their assets if needed (Gurufocus).
Leverage Ratio The leverage ratio for Dell was unavailable but the
industry average is at 1.74%. The lower the percentage here the better, if a
company has a high leverage ratio this means that they have a lot of debt
relative to equity.

Investment Ratios
Return on Equity Dells return on equity is 7.58%, while the industry
average is at 15.2%. This ratio measures how profitable a company is. The
industry average of 15.2% is better than Dell (Gurufocus).
Return on Capital Dell has a return on capital of 15.78%. The industry
average is unavailable but industry leader HP has a return on capital of
10.96%. Dell is better at handling capital than HP (Gurufocus).
Return on Assets Dell has a return on assets of 1.8%. The industry
average is unavailable but the industry leader HP has a return on assets of
5.14%. Dell does not manage their assets as well as HP (Gurufocus).

Management Efficiency Ratios

Revenue per Employee Dell has a revenue per employee of 523,346.
349,720 is the industry average. Dell produces more revenue for each
employee that they have (Gurufocus).
Receivables Turnover Ratio Dell has a receivables turnover ratio of 5.8.
The industry average was unavailable. This number tells us that the average
accounts receivable turnover is 62.9 days (Gurufocus).
Inventory Turnover Ratio Dell has an inventory turnover ratio of 8.28.
The industry average was unavailable. The number tells us how many days

of inventory Dell has in inventory. This number can fluctuate depending on

the time of the year (Gurufocus).
Assets Turnover Dell has an assets turnover of .32, while the industry
average of .73. The higher the number the better for asset turnover because
it means the company is generating more revenue per dollar of assets
(Gurufocus).

Where is the firm financially strong and weak as indicated by

financial ratio analyses?
When looking at financial ratios I would say that Dell is strong in a couple of
categories. The first being debt/equity ratio. I believe that Dell is in a good
situation here with a debt/equity ratio of .63. To me this means that Dell
hasnt financed as much of its growth with debt as the rest of the industry.
The other financial ratio where Dell is strong is the quick ratio. Dell has a
quick ratio of 1.12% which is nearly double the industry average. In times of
need Dell is more likely to be able to consolidate their assets then the rest of
the industry.
Can the firm raise needed short-term capital?
I believe based on the current ratio that Dell could raise short-term capital. A
current ratio of 1.18% is very good in the industry and means that Dell could
meet their short-term obligations very easily.

Can the firm raise needed long-term capital through debt and/or
equity?
Looking at Dells debt/equity ratio I believe that they are in a good position to
raise long-term capital through both debt and equity. Their debt/equity ratio
of .63% means they are in good position to handle any debts.
Does the firm have sufficient working capital?
According to year-end figures for 2013, Dell has a working capital of $4529.
This is a sufficient amount of working capital for Dell.
Are capital budgeting procedures effective?
I believe that Dells capital budgeting procedures are very effective.
There quick ratio and debt/equity ratio compare favorably to the rest of the
industry meaning to me that they are right where they want to be.
Are dividend payout policies reasonable?
Dells dividend payout policy is reasonable. In 2013 they paid out a
dividend of $.32 per share. I could not find historical data for Dell but
compared to industry leader HP they compare favorably. HP paid a dividend
of $.13 per share in 2013(HPQ: Dividend Date & History for Hewlett Packard).
Does the firm have good relationships with its investors and
stockholders?

Currently Dell does not have stockholders as they are a private

company. They went private on October 29th, 2013 as Michael Dell and Silver
Lake Partners acquired the company (Dell is now a private company).
Are the firms financial managers experienced and well trained?
With the decision to go private being made by founder and CEO
Michael Dell I would say that Dell has experienced and well trained
managers. He founded Dell in 1984 and Michael Dell has been a part of it
ever since. CFO Thomas Sweet has been with Dell in some capacity since
1997 (List of private companies worldwide).

Strategy Selection

QSPM

Key Factors
Opportunities
1. Grow in the consumer market
(students and families)
2. Bring more employees to the
states

Weig
ht

1)
Marketing
blitz on
social
media to
gain a
larger part
of college
age
market
AS
TA
S

0.14

0.10

0.5
6
0.1
0

2) Develop
new, lower
priced PC
to set the
market

AS

TAS

0.42

0.10

3. Maintain its position in the

market
4. Grow sales in developing
countries in Europe and in Asia
5. Set lower prices to pass HP in
sales

0.08

0.07

0.06

6. Increase demand for laptops

0.05

Threats
1. Growing competition
(Smartphone market)

0.21

2. Growth-rate of the market

0.10

3. Labor costs

0.08

4. Demand for perfect product

0.06

5. Rapidly increasing technology

0.05

Total
Strengths
1. Direct Sales Method (No Middle
Man)
2. Second Largest PC Maker in
the World
3. Growing Number of Employees.
Better customer service
4. Global Recycling Program

1.00

5. Less overhead with direct sales

method
6. Product Customization
Weaknesses
1. Late into the market causing
low profit margins
2. 60% of employees work
outside of the United States
3. Outsourcing more of its work to
keep up globally
4. 80% of sales to corporate and
government

0.15

0.12

0.08

0.06

0.05

0.04

0.25

0.10

0.09

0.05

0.2
4
0.2
8
0.1
2

0.24

0.14

0.24

0.1
5

0.05

1
0.6
3
0.2
0
0.0
8
0.1
8
0.1
0

0.21
3

0.30

0.16

0.18

0.05

0.1
5
0.3
6
0.0
8
0.0
6
0.0
5
0.1
6

0.60

0.12

0.08

0.06

0.10

0.04

0.2
5
0.1
0
0.0
9
.20

.75

0.10

0.09

.05

5. Difficult to Just buy a dell

0.01

Total

1.00

0.0
2
4.1
6

0.01
4.09

Strategic Selections
The first of the two strategic selections to choose from is to perform a
marketing blitz on social media. The thought behind this is to gain the
attention of those who use social media. 67% of Americans currently use
social media and to use it you need a computer (67% Of Americans Use
Social Media). Going further 96% of college students use social media
(UNH). With knowing these statistics and knowing that 80% of Dells sales
are to government and corporate business I feel that there is a large
opportunity in gaining more college aged business. With a marketing blitz on
social media sights we will be in front of their eyes, maybe for the first time.
This would give them an alternative to our other competitors.
The second of the two strategic selections is develop new, low priced PCs
to set the market price. There is a market for a company that wants to be
the low priced niche company if someone wants to step up and do it. With
the Dell name, there would be a following of people who would trust Dell and
would still buy a cheap Dell. Dell has a history of coming late into the
market and if they were to be the first into a market I feel that it would
benefit greatly (David, 2013).
Evaluating the Output of the QSPM

The strategy of a marketing blitz via social media scored a 4.16 on the QSPM.
This score ranks just above the score of 4.09 for developing a new, lower
priced PC to set the market. This strategy will be crucial if Dell is going to
grow in the market and pass industry leader Hewlett Packard. Dell needs to
venture into the market of people who are aged 18-25 and the way to do
that is to get the product in front of them by marketing to them where 96%
of them are at and that is on different social media platforms such as
Facebook, Twitter and Instagram.

Dell Inc. will have a very organized implementation plan that will be
carried out by founder and CEO Michael Dell. Michael Dell has been with the
company since he founded it in 1984. Dell has a great group of very
experienced advisors with him including CFO Thomas Sweet who has been
with the company since 1997. The strategy that they will carry out will be to
target the market of 18-25 year olds through a social media marketing
campaign. The main forms of social media that will be used will be
Facebook, Twitter, and Instagram. The name of this new marketing
campaign will be operation College Bound. These three outlets of media are
used by 96% of college aged students (UNH). If Dell can start to gain a
larger majority of that market they wont have to rely so much on their sales
to government and corporate business. I believe that they can have both,
they can sell to both corporate and government as well as start to sell to
college students.

Operation College Bound will be a full-fledged marketing campaign to

get the Dell product in front of college students. If college students begin to
use Dell products when they are at the age where they will use a computer
more than any other age in their lives then this may lead to them being very
brand loyal as they get older. Operation College Bound will look to grow
sales through advertising during two, two-week marketing periods.
The first two week period would be the last week of July and the first
week of August. We will use advertising on the three main types of social
media that were mentioned earlier. The reason to do this two weeks is
because this is the stretch in time when college students first begin to shop
for their school year. The second two week period would be the week of
Thanksgiving and the week after. This is another huge shopping period
before Christmas. This would target the students who realize they do not
have the proper equipment they needed in their first semester of college.
The three forms of social media all have very different costs to
advertise on them. The first being Facebook. According to information found
from 2013, the minimum amount to spend per day for an advertiser is $1 per
day with the minimum cost per click being $.01. US advertisers on average
will have to pay $24.00 to get 100 people to click on their advertisement or
will have to pay $24.00 to get their ad shown 36,364 times. (Facebook).
Twitter is a little more expensive to advertise on and has a few different
options on how to advertise. The best option would be to have a promoted
trend. The cost of doing this would be $200,000 per day. This price

guarantees your advertisement to be trending nationally on twitter for one

day. (Quora). The third form of social media that I would like to advertise on
would be Instagram. There are varying costs to advertise on Instagram, the
amounts range from $350,000 to $1,000,000 per month. To advertise for the
two weeks we would need the cost would vary from $175,000-$500,000
(Shortstack).
The marketing material itself will range from a simple Dell logo to some
ads that will focus on showing college aged students that we can help them.
More than ever college students need more than just a word processor. They
need a PC that will do many things, by advertising on Twitter, Instagram and
Facebook we can show the target market that they can achieve all their goals
on our products.
The goal of Operation College Bound will be to grow overall sales 10%
of Dell products. If we gain in the college aged market a 10% increase is
very attainable.
COST
With the costs that we know the total cost of Operation College Bound
would be $6,275,672 per year. This would cover a total of four weeks of the
marketing campaign. This will be a 5 year project. The length of 5 years is
subject to change based on the success of the campaign. I chose 5 years
because you will touch two generations of college students. The total cost of
the 5 years is $31,378,360.

EPS/EBIT Chart
Amount Needed - $31,378,360
Interest Rate 5%

Tax Rate 16.5%

Stock Price $13.73

Outstanding Shares 1,764,000

CommonStockFinancing
Recession
Normal
Boom
EBIT
Interest
EBT
Taxes
EAT
#Shares
EPS

EBIT
Interest
EBT
Taxes
EAT
#Shares
EPS

$590,000,000
0
590,000,000
97,350,000
492,650,000
4,049,387
121.66

$698,000,000
0
698,000,000
115,170,000
582,830,000
4,049,387
143.93

$750,000,000
0
750,000,000
123,750,000
626,250,000
4,049,387
154.65

30
Recession

PercentStock
Normal

70
Boom

$590,000,000
1,098,243
588,901,757
97,168,790
491,732,967
2,449,616
200.74

$698,000,000
1,098,243
696,901,757
114,988,790
581,912,967
2,449,616
237.55

$750,000,000
1,098,243
748,901,757
123,568,790
625,332,967
2,449,616
255.28

Recession
$590,000,00
0
1,568,918
588,431,082
97,091,129
491,339,953
1,764,000
278.54

70
Recession
$590,000,00
0
470,675
589,529,325
97,272,339
492,256,986
3,363,771
146.34

DebtFinancing
Normal
$698,000,000
1,568,918
696,431,082
114,911,129
581,519,953
1,764,000
329.66
Percent
Stock
Normal
$698,000,000
470,675
697,529,325
115,092,339
582,436,986
3,363,771
173.15

Boom
$750,000,00
0
1,568,918
748,431,082
123,491,129
624,939,953
1,764,000
354.27

30
Boom
$750,000,00
0
470,675
749,529,325
123,672,339
625,856,986
3,363,771
186.06

Analysis
With Dell Inc. no longer being traded publicly they can no longer issue
new stock to finance any new ventures. With being the fact Dell will have to
finance all new things with Debt financing

Projected Financial Statement

INCOME
STATEME
NT
Revenues
Total
Revenue
Cost of
Revenues
Gross Profit
Selling,
Administratio
n, Marketing

(FY
2013)

(FY
2015)

(FY
2016

(FY
2017)

56,940
.00
56,94
0.00
44,754
.00
12,186
.00

58,363
.50
58,363
.50
45,523
.50
12,840
.00

59,822
.59
59,822
.59
46,661
.60
13,160
.99

61,318
.10
61,318
.10
47,828
.10
13,490
.00

8,102.
00

10,500
.00

10,500
.00

10,500
.00

Depriciati
on &
Amortizatio
n
Research
&
1,072.
750
developme
00
nt
Restructu
ring
Other
operatinig
exp.
/-income
Unusual
Income/
-Expense
Total
operating
53,92
56,77
costs
8.00
3.50
including
COS
Operating
3,012. 1,590.
income/00
00
loss
Other Deductions / Interest
expense
Interest
income

-171

-150

500

450

57,66
1.60

58,77
8.10

2,160.
99

2,540.
00

Income
-75

-50

Net
interest
expense/income
Loss/
-Gain on
Investment
Sale of
Business
Sale of
Assets
Financing
Loss/
-Income
Other
loss/
-income
Total
costs &
expenses
Income
/-loss
before
income
taxes

171

75

50

54,09
9.00

56,92
3.50

57,73
6.60

58,82
8.10

2,841.
00

1,440.
00

2,085.
99

2,490.
00

469

500

550

600

2,372.
00

940.0
0

1,535.
99

1,890.
00

2,372.
00

940.0
0

1,535.
99

1,890.
00

2,372.
00

940.0
0

1,535.
99

1,890.
00

Income
taxes
expenses/benefit
Income
after
income
taxes
Income/loss from
cont. Ops.
Net
Income/loss
Noncontro
lling
interests
Prefered
dividends
Other

150

Income/loss to
shareholder
EBIT

2,372.
00

940.0
0

1,535.
99

1,433.
00

3,012.
00

1,590.
00

2,160.
99

2,540.
00

Conclusion
The implementation plan for Dell Inc. will have to be very organized as
it is an expensive plan. The plan will be headed by very experienced people
including founder and CEO Michael Dell. Because of this fact I believe that
this gives Dell a leg up on their competition because of his 30 years of
experience in the PC market.

References
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