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Dell Indirect: How to Sift for Clues in Its Report

The PC maker's earnings will be absent much detail and likely short of estimates.

Turning

Dell

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around is no easy task.

And investors looking to gauge the progress of the undertaking won't get much satisfaction Thursday.

The company's fiscal first-quarter results, slated for release after market's close, are likely to be short on both details and results.

The struggling PC maker has warned investors that growth and profit margins will continue to be under pressure for the next several quarters as Dell focuses on righting its ship.

Wall Street has interpreted this vague guidance to mean that Dell will see its quarterly sales tally lag the year-ago total, the second such decline in a row. On average, analysts expect Dell to record $13.95 billion in revenue, vs. $14.2 billion at this time last year, with EPS of 26 cents, according to Thomson Financial.

The low expectations were reinforced when rival

Hewlett-Packard

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reported a

blockbuster quarter earlier this month, which many assume came at Dell's expense.

Estimates about the immediate quarter aside, however, Michael Dell's mission to revive the company he founded 23 years ago remains a mysterious work in progress.

Shares of Dell are up roughly 14% in the past three months, trading near the 52-week high of $27.89, as investor faith in Michael Dell's magic touch trumps any actual evidence of a turnaround at the company.

Because of the

accounting investigation hanging over the company, Dell will once again provide limited financial information about its quarterly results and skip the customary conference call.

This reign of silence has forced investors to dissect every product announcement, partnership and personnel change for hints about the company's broader plans and financial prospects.

The latest round of tea-leaf reading occurred last week with news that Dell would

offer certain models of its desktop PCs at

Wal-Mart

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stores. (Note that Dell did not issue a press release but let Wal-Mart do the announcing.)

The move marked Dell's first significant departure from selling PCs directly to customers through Internet and telephone orders -- a change many analysts say is overdue.

The most intriguing question for many investors and analysts, though, involves Dell's choice of Wal-Mart, rather than an electronics superstar such as

Best Buy

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, for its long-awaited foray into retail.

After all, Wal-Mart is known as the place for "always low prices," which could mean Dell has decided to forego boosting its profit margins in favor of acquiring market share with inexpensive PCs.

"We don't believe margins will be compelling and would argue that more units sold do not necessarily translate into meaningful profits," American Technology Research analyst Shaw Wu wrote about the Wal-Mart deal in a recent note to investors.

Dell's operating margins are already in decline. In the fourth quarter, Dell had a 5.5% operating margin, vs. 8.2% in the year-ago period.

David Wong, an analyst at A.G. Edwards, speculated in a recent investor note that the Wal-Mart partnership could allow Dell to step up its sales of non-PC products. (A.G. Edwards makes a market in Dell securities, and the firm or its officers have long and short positions in the company.)

Indeed, Dell appears to be looking for the right approach to successfully compete in the growing market for electronic gadgets. In recent months, Dell has killed off its line of handheld PCs and started offering flat-panel TVs from

Sony

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and Panasonic, in addition to its own Dell-branded TVs.

In February, Dell tapped

Motorola's

(MOT)

Ron Garriques to

head a newly created global consumer group..

The new group has the potential to take Dell down various promising new paths.

Until Dell puts the accounting investigation behind it and actually discusses details about its comeback plans on a conference call, though, investing in the PC maker remains a guessing game.