Bar Set Low for Dell

Within Dell's flagship PC division, which accounts for around 80% of sales, slight softness in corporate desktop and notebook sales likely offset strength in Europe, Asia Pacific and the U.S. consumer markets, noted Goldman Sachs.

Among other constricting factors in the quarter, prices for components like flat-panel displays stayed firm, limiting potential margin gains.

Looking forward, analysts expect the company to deliver in-line guidance of 28 cents in earnings and $11.2 billion in sales for the April quarter.

Goldman predicted the company can notch year-over-year unit growth above 20% for the seventh quarter in a row in the April quarter. As for the conference call scheduled to take place after the Thursday close, Goldman analyst Laura Conigliaro predicted Dell's comments on enterprise demand will be "encouraging, probably falling somewhere between IBM's(IBM) earnings conference call commentary, which was noticeably more positive than prior statements from the company, and Cisco's(CSCO), which was similar but not quite as bullish."

Since Dell's stock price has tended to follow its upward sales trajectory, she thinks the stock could see 15% appreciation over the intermediate term. Analysts expect about 15% revenue growth in the fiscal year that ends in January 2005. Goldman has an outperform rating on the shares; it hasn't done recent investment banking for Dell.

Meanwhile, downside is likely to be fairly limited since Dell shares haven't appreciated much lately. "I'd love to see the stock up a couple more dollars, then I think it'd be an easy short for at least 10%," said Adams. "But I'm not sure how much the stock will come off from these levels."

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