Dell Nears Low Bar

For two straight quarters now, Dell(DELL Quote) has fallen short of the Street's expectations. But few investors are expecting a third strike when the Round Rock, Texas, computer maker reports fiscal fourth-quarter results after the bell Thursday.

Of course, meeting expectations shouldn't be too difficult, given how low Dell has set the bar. Its guidance of $14.6 billion to $15 billion in revenue represents 9% to 11% growth, a far cry from the 17% growth investors once expected.

To some, the slow growth owes to a sort of provincialism, with Dell so heavily reliant on the U.S. market and Intel(INTC Quote).

"It's harder for them to gain share internationally," says PNC Advisors VP Equity Research Bill Gorman, whose firm recently reduced its position in Dell. "The U.S. is still the biggest part [of Dell's business] and that's the slowest growing market right now."

Despite Dell's moves to branch out, the Americas remains the company's major playing field, representing 66.3% of revenue in the most recent third quarter. The revolving door in Dell's Asian operations hasn't helped. In December, William Amelio, Dell's Asia Pacific Division chief, jumped ship to Lenovo Group. The move came just two months after Dell's head of China operations, Foo Piau Phang, resigned.

Still, there's evidence that Dell is finding its footing abroad. Unit shipments in China were up 46% year over year in the fiscal third quarter. And industry research firm IDC reported that Dell's PC shipments in Asia Pacific jumped 19% in the fourth quarter of calendar 2005, the strongest showing among the top five PC makers.

Meanwhile, investors have questioned whether Dell's loyalty to Intel chips, which Dell uses exclusively in its products, is putting the company at a competitive disadvantage. Although Intel's microprocessors are by far the most popular in the world, many corporate buyers are partial to rival Advanced Micro Devices'(AMD Quote) Opteron processor when it comes to the servers that run their back-end data centers.

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