Bar Set Low for Dell

Dell(DELL) is likely to report just what Wall Street expects when the company dishes up January quarter results Thursday afternoon. But it probably can't deliver what the market really wants: reason to push the shares higher.

Dell shares, which are flat year to date based on Wednesday's close of $33.69, remain stuck at levels reached last fall. Though the stock managed to spike up past the $36 level in October and again last month, it proved unable to hold onto those gains.

Few would rule out the potential for PC powerhouse Dell to sneak in an upside surprise in the latest round of earnings. But this time around, it would certainly run contrary to the prevailing expectations on the Street.

Most analysts think Dell will meet consensus estimates and do no better. The current Thomson First Call forecast is for the company to earn 28 cents per share on sales of $11.5 billion for the quarter ending in January.

Among negative factors in the quarter, perhaps the biggest is that Dell is expected to report a slight shortfall in its guidance for 25% year-over-year unit growth. In the quarter ending in December, market research suggests Dell saw only 20% unit growth, according to Merrill Lynch.

"What we're hearing is that units came in a little weaker than expected because [Hewlett-Packard] picked up market share," said Patrick Adams, manager of the (CHLAX)Choice Long-Short fund, which has no position in the shares. "I think to try to get back share, they've been pretty aggressive in terms of price."

In that vein, several analysts noted that Dell had been rolling out promotions like 0% financing for 90 days, along with free shipping, hard drive upgrades and other incentives.

Dell may have been responding to tougher competition from Hewlett-Packard(HPQ), which posted 16% sequential growth in the fourth quarter vs. Dell's growth of 10%.