Public sector sales accounted for more than a quarter of Dell's total revenue during the second quarter, and the company's shares slumped after Cisco CEO John Chambers described the now-infamous "airpockets" in government spending last week. "Cisco's commentary raises a red flag on Dell's above-peer government exposure," explained Mark Moskowitz, an analyst at JP Morgan, in a recent note. "If the government vertical were to pull back on IT spending, we think that Dell would have higher relative risk of operating slippage." The analyst, who rates Dell underweight, also warns that the company's market share gains in servers and storage could be slowing, placing the company's gross margin firmly in the spotlight. With margins typically low in the PC business, areas such as servers and storage play a key role in driving Dell's profits, so investors will be closely monitoring the firm's third-quarter gross margin. "We think that Dell's gross margins could exhibit little upward pressure as upside from higher-margin system sales potentially fades," explained Moskowitz. Wall Street is looking for Dell's gross margin to come in around 17.5%. Overall, though, analysts are looking for decent third-quarter sales and earnings from Dell, which has been enjoying a healthy IT spending environment in recent quarters. Analysts surveyed by Thomson Reuters expect the company to report revenue of $15.74 billion and earnings of 32 cents a share, compared to sales of $12.9 billion and earnings of 17 cents a share in the same period last year, although this figure included 6 cents of organizational expenses and amortization. The PC maker is also likely to face questions about its tablet strategy during Thursday's conference call, which TheStreet will be live-blogging. Dell, like HP, has been ramping up its tablet strategy, but is playing serious catch-up to Apple's ( AAPL) iPad.