Dell's weekX

For the last 4th quarter report, DELL included 14 weeks of results, from Oct 29, 2005 to Feb 3, 2006 and compared it with the results from Oct 30, 2004, to January 28, 2005, 13 weeks of last year.

Specifically, 13 weeks were the same, the extra week was from Jan 30, 2006 to Feb 3, 2006, let's call this extra week the weekX (Jan 30, 2006 to Feb 3, 2006).

The obvious question is what kind of revenue contribution came from the weekX?

If we simply assign the average weight of 1/14 or 7.14% to weekX, we find DELL's revenue declined sequentially on all segments and declined year/year on desktop and server.

DELL dudes are no idiots, so they would try very hard to downplay the weekX.

During the DELL conference call, its CFO Jim Schneider stated that "we had an extra week in the quarter that contributed about 2 to 3 points of added growth, which was slightly more than we expected."

So according to DELL's CFO, weekX was only 30% to 40% of an average DELL week, and actually DELL was expecting less from weekX. Basically, DELL was saying that weekX should be and was pretty much a dead week. What's special about this week, which was one month after the Christmas week? What about weekX+1 and weekX -1?

The Wall Street analysts are not stupid, they sensed the problem there and pressed on for more details on revenue from the weekX, and Kevin Rollins, DELL CEO stated under oath:

"I would say, because the consumer business trends off in the January timeframe, and it has its kind of lowest in ebb in Q2, the gains would have most likely been made in the corporate and enterprise arena worldwide at the end of that week. That’s why we were a little bit guarded on the extra week, because corporations don’t buy per day. They have a budget in a quarter that their IT folks are able to spend or not spend and meet. So we did not think we would get a full week’s impact out of that extra week due to that."

This is a very wordy answer for a simple question. Every company has a determinative method of recognizing revenue, DELL is no exception. According to DELL's SEC filings, essentially, revenue is recognized when the products are delivered to customers. Therefore, there is a specific revenue number for weekX and DELL knows what that number is -- just account the products leaving DELL's shipping docks, and DELL can pull that information at a mouse click as its system is fully computerised.

I bet that one day, SEC will have to open DELL's books and compute the revenue for weekX.