This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Dell Needs to Deliver

SAN FRANCISCO -- After seeing sales stagnate for nearly two years, Dell (DELL) is set to resume its growth.

At least that's what Wall Street is expecting, given the average analyst estimate that the PC maker's fiscal fourth-quarter revenue increased at a double-digit clip.

Whether or not this growth represents the fruits of a comeback or simply reflects an easy year-on-year comparison should become more clear when Dell reports earnings after Thursday's market close.

Since Michael Dell returned to the CEO spot in January 2007, the company has overhauled many long-time pillars of its business model.

Dell PCs are now available in retail stores like Wal-Mart (WMT), Best Buy (BBY) and Staples (SPLS), with an eye on the consumer -- a striking departure from Dell's previous strategy of selling exclusively through Internet and phone orders as it primarily courted corporate customers.

And the company has made a string of acquisitions, the majority intended to bolster Dell's growing services business.

But investors, already nervous about the prospects of tech companies in a slowing economy , are waiting for Dell's various new initiatives to yield tangible results: Dell's stock is down 26% since November.

"There are a lot of skeptics out there on Dell. The turnaround has not happened overnight," says Pacific Crest Securities analyst Brent Bracelin.

Indeed, as recently as the third quarter, Dell's results offered more fodder for worry than inspiration. The company's third-quarter gross margin was down, operating expenses were up, and sales of Dell's consumer PCs fell 6% year over year.

Despite the bumpy road, Bracelin believes Dell is now repositioned for growth, and expects the numbers in the fourth quarter to begin moving in the right direction.

Analysts polled by Thomson Financial expect Dell to earn 36 cents a share in the fourth quarter, with sales of $16.2 billion -- up 12.5% year-over-year. That's not too spectacular a feat, given how weak sales were in the year-ago period, but it still represents Dell's fastest growth since the fourth quarter of 2005.

American Technology Research analyst Shaw Wu believes Dell could actually beat the Street's top- and bottom-line expectations for the fourth quarter. He notes that the average analyst estimate calls for Dell's sales to grow only 3.9% sequentially, slower than the 4.9% rate he says is normal for this time of year.

Yet even as Dell moves ahead with its comeback plan, it does so against the backdrop of a worsening economic climate.

Industrywide PC shipments were strong in the fourth quarter, growing 15.5% year over year according to research firm IDC. But Dell may not be able to count on such robust demand going forward.

On Wednesday, JP Morgan analyst Christopher Danely issued a note to investors warning of decelerating PC demand, citing rising microprocessor stockpiles across the industry.

Dell has taken much-needed steps to fix its competitive shortcomings. Whether that can save the company from a prolonged slump in demand is another story.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs