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News : Irish Last Updated: Dec 19th, 2007 - 13:17:15


Ireland's largest exporter Dell is responsible for 4% of all expenditure in the Irish economy
By Finfacts Team
Jun 1, 2006, 11:31

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Micheál Martin, T.D., Minister for Enterprise Trade and Employment officially opened  Dell’s EMEA Business Campus, at Cherrywood, Co Dublin on June 1, 2006, where ultimately up to 1,650 employed will be employed there. Dell is Ireland's largest exporter.

The Minister said that Dell Ireland is the the 2nd largest ICT employer in Ireland (after chipmaker Intel) with over 4,300 currently employed between Dublin and Limerick. 

Dell’s importance to the Irish economy is evidenced by  the company’s contribution of at least 5.5 per cent of Irish exports, 2 per cent of GDP and over 4 per cent of all expenditure in the Irish economy.  In the financial year ended 30th January 2004, Dell paid €160m in salaries in Ireland.   For the financial year ended 30th January 2005, Dell paid €55m in Corporation Tax.

Dell headquarters Round Rock, Texas - Much of the PC industry's growth is coming from strong demand in China and India.

"I am particularly pleased at the quality of investments in 2005 and their regional spread. I am also very encouraged to see that of the €1.035 billion invested in 121 projects, €275 million of this has been invested in 50 R&D projects. The calibre and quality of the jobs being created is also critical with over half of all jobs created requiring third level qualifications and almost 40% of all new jobs in IDA-backed projects now earning in excess of €37,000 per annum," Martin said.

In the global context, Dell Inc., Texas, is one of the world’s fastest growing company (Fortune 500), the world’s Number One manufacturer of computers and during 2005 was the Number One supplier of personal computer systems worldwide. The company employs 65,000 people globally and has sales offices in 170 countries. The company currently has an 18% market share of the worldwide PC market.   Dell provides products to 90% of the Fortune 500.

For the year ended 3rd February 2006, Dell recorded a 14% increase of net revenues to US$56 billion, net income of US$4 billion, total cash and investments of US$12 billion. During this time an extra 10,000 people were hired. EMEA revenue during this period was up 19%, generating $12.9bn in revenue (23% of total revenues). During this period Dell announced new facilities in El Salvador, Japan, China and the Philippines – including ten customer contact centres in the US, a Dell Design Centre in Singapore and a Dell Enterprise Command Centre in Malaysia. Dell also doubled manufacturing capacity in China (fourth largest market) and shipments increased 37% during this period.

Dell’s objective is to be an $80 billion company in the next three years and Dell expects 55% of growth to come from international markets with Europe representing a strong growth market for Dell. The company is also investing in high growth countries like China, India, Brazil and Malaysia. Industry analysts continue to report favourably on the ability of the company to achieve this $80bn goal.

Dell under pressure

Dell has failed to meet profit targets in its last two quarters and it is struggling in a competitive global market at a time when attention has increasingly focused on the standard of its customer service and its reliance on its direct-sales model of web and phone, has been called into question.

Consumers and small businesses, which together account for 20 percent of Dell's revenue, have to contend with problems such as spyware and other issues that may be software related, but for non-IT experienced individuals, are easier to handle face-to-face at a store.

Dell reported in May an 18% drop in net income in its second quarter.

Dell had operating income of $949 million, or 6.7 percent of revenue, in the quarter, which reflected investments in customer experience as well as pricing decisions the company believes will drive future growth. Cash flow from operations was $1.0 billion for the quarter and Dell ended the quarter with $11.1 billion in cash and investments. During the quarter, Dell spent $1.7 billion to repurchase 58 million shares of common stock.

First Quarter
(in millions, except share data) FY'071 FY'06 Change
Revenue $14,216 $13,386 6%
Operating Income $949 $1,174 (19%)
Net Income $762 $934 (18%)
EPS $0.33 $0.37 (11%)

1 Results for the three months ended May 5, 2006 include stock-based compensation expenses of $77 million net of tax, or $0.03 per share, due to the implementation of Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payments, ("SFAS 123(R)"). Dell implemented SFAS 123(R) using the modified prospective method. Accordingly, net income prior to fiscal 2007 includes only compensation expense related to restricted stock awards, but does not include stock-based compensation expense for employee stock options or the purchase discount under Dell's employee stock purchase plan.

Dell said in May that it would begin using chips manufactured by Intel rival AMD and it would also open two US mall stores this summer as a market test, making them a hybrid of Dell's direct model and a conventional electronics store. Dell's products will be on display but not for sale. Customers will be able to order a PC, television or printer online from the store. Products will be delivered to the customer as if they had ordered from a PC at home, as most of its customers do.

Dell says that it is not losing confidence in the direct-sales model that has made it the world's top PC manufacturer. "The tenets of the model remain the same," said Venancio Figueroa, a Dell spokesman. Dell has been using free-standing booths or kiosks in US malls since 1994. The company said that the mall stores are just bigger versions of those kiosks and will be able to display far more merchandise.

Ireland's two biggest private sector employers Dell and Intel [in recent quarters, it has faced falling margins and it is losing market share to AMD (Advanced Micro Devices), which has announced a USD$2.5 billion investment in its Dresden, Germany plants] are facing challenging times.

As foreign-owned firms in Ireland, were responsible for 87% of Irish exports in 2005, Ireland is also facing challenging times.


© Copyright 2007 by Finfacts.com

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