Updated from 9:44 a.m. ET

Merrill Lynch

cut its earnings estimate for

Dell Computer's

(DELL) - Get Report

fiscal year ending in January 2002 to 85 cents from 90 cents a share, primarily because of what the firm believes will be continued gross margin pressure.

The firm set an earnings estimate of $1.05 for fiscal 2003, which would imply year-over-year growth of 24%. Shares of Dell recently gained 13 cents, or 0.5%, to $23.38 in morning trading on the

Nasdaq

.

According to

First Call/Thomson Financial

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, 21 analysts expect 2002 earnings of 90 cents a share, compared with an estimate of 85 cents a share for 2001. Seven analysts produced a consensus profit forecast of $1.13 a share for 2003.

This morning, Merrill also raised its fiscal 2002 sales estimate to $37.48 billion, which would be an 18% increase, up from a previous growth estimate of 17%. The firm raised the top line forecast "based on Dell's proven ability to drive share gains through aggressive pricing even in a weak demand environment." Analysts on average see 2002 sales of $37.5 billion, compared with an estimate of $31.8 billion for 2001 sales.

Merrill, which maintained a buy rating on Dell, also projected that the PC maker will report sales of $43.85 billion for fiscal 2003, which would represent year-over-year growth of 17%.

The Round Rock, Texas, box maker will report its much-awaited fourth-quarter and full-year 2001 results on Thursday, which the company has

foreshadowed with earnings and revenue warnings. Last week,

The Wall Street Journal

reported that Dell plans to enact

cost-cutting moves that could lead to as many as 4,000 job cuts.

In another report this morning,

Salomon Smith Barney

analyst Richard Gardner said he believes Dell will met the revised revenue and earnings estimates for the fourth quarter, but that the company will downwardly revise its revenue growth target for the 2001 calendar year to about 15% from 20% to reflect the continued weakness in U.S. demand. Dell forecast fiscal 2001 revenue of $32 billion on Feb. 2.