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Dell's Report Will Show if the Old Horseman Can Ride High Again

As PC growth slows, the Street will watch -- as the boxmaker reports -- how Dell is doing in its server and storage venture.

The Dell File


Business: Direct seller of computers and computer systems

Fiscal Year 2000 Revenue: $25.27 billion

FY 2000 Earnings Per Share: 68 cents

2001 Estimated Earnings Growth: 34% (to 92 cents)

Stock Snapshot

Stock Price: $32.50 (11/7 Close)

52-Week Range: $22.06 - $59.69

Percentage Change from Jan. 1: -36%

Market Cap: $84.2 billion

P/E Multiple: 43.4

Shares Outstanding: 2.62 billion

Source:Baseline, Dow Jones Interactive.

Is it possible to teach an old horseman new tricks? In the case of

Dell Computer

(DELL) - Get Dell Technologies Inc Class C Report

, investors certainly hope so. Or, they hope that at least it applies its old tricks into new markets.

The Round Rock, Texas-based producer of direct-sales computers will announce fiscal third-quarter earnings Thursday, which may give an indication of how the company's big transition into higher-growth sleeves of technology is proceeding.

Dell was a stalwart of the Roaring '90s stock market as one of the "Four Horsemen" of PC-centered technology, alongside


(MSFT) - Get Microsoft Corporation Report


Cisco Systems

(CSCO) - Get Cisco Systems, Inc. Report



(INTC) - Get Intel Corporation Report

. But dwindling PC sales have hurt the company's growth, which led the company to guide the Street to lower revenue figures for the fiscal third quarter.

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In a bid to move into more new tech areas and keep the salad days of growth alive, Dell is making a foray into the competitive areas of computer servers and data-storage systems.

The move may be costly, and recent stock activity indicates the Street isn't entirely convinced. The stock is off 36% so far this year -- nonetheless, that leaves Dell with a still awe-inspiring 90% average annualized return for the past five years through Nov. 7, according to





Wednesday, a day before the big earnings report, the company's stock fell $2.25, or 6.9%, to $30.31, amid a broad selloff on the

Nasdaq Composite Index

. What happens to the stock Thursday and going forward depends in large part on whether Dell shows it has fresh horses to rush into new areas. The consensus analysts' estimate for Dell's 12-month stock-price target is $53.32, according to

Dell made its name on direct-to-consumer selling, and it hopes to transport its success into new areas. While the company isn't known as a tech innovator within the industry, it has made major inroads into competitors' businesses by undercutting rivals with a distribution system of low inventories and just-in-time delivery.

By eliminating intermediaries and reducing inventory to hours, Dell has become the No. 1 seller in the desktop and portable computer markets. But standing in front of Dell in the server market are established outfits such as






, while storage giant



certainly isn't willing to cede ground to upstart Dell.

While the market is anticipating Thursday's earnings report, Dell's charge into new tech is likely to take place over the next several quarters.

Background Check
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