Investors aren't likely to find much cause for complaint when PC giant

Dell

(DELL) - Get Report

reports October quarter earnings after the bell Thursday.

No one expects Dell to have any trouble notching Wall Street consensus estimates of $10.54 billion in revenue and earnings of 26 cents a share.

For now, the top item on Wall Street's wish list is largely out of Dell's control: Despite a flurry of computer spending by consumers, big businesses haven't stepped up their buying yet.

"With strength in consumer, small business, Europe and Asia, a truer pickup in large corporate now remains the key variable for further acceleration in 2004," concludes Robert Cihra of Fulcrum Global Partners. He has a buy on Dell shares; his firm doesn't do banking.

Short of overwhelming evidence of an enterprise rebound, analysts expect Dell to stick to its usual chaste outlook script.

"Dell's commentary about the overall demand environment is likely to echo other recent statements by the company, namely, that there are pockets of relative strength (i.e., small and medium businesses, government and consumer), but that overall IT spending remains subdued and generally unchanged, particularly with large corporate customers, despite improved activity levels," predicts a note from Goldman Sachs.

Aside from the big-picture corporate outlook, price pressure in Dell's core computer business remains a minor trouble note as the company competes with a tenacious

Hewlett-Packard

(HPQ) - Get Report

.

Indeed, H-P managed to narrow the gap with market-share leader Dell in the third quarter, according to a report from market research group IDC. Dell remained barely ahead, claiming 17.4% of global PC shipments to H-P's 17.1%.

All that competition takes a toll: Goldman estimates Dell will show year-on-year price declines of about 13% in the October quarter, with pressure coming from notebooks and low-end desktops.

Despite price pressure, the third quarter has offered up plenty of cheerful news on rising unit demand for PCs, prompting Goldman Sachs to boost its 2003 PC unit growth outlook in late October. The bank now expects volume growth of 10.5% this year, up from 7.6%, and it predicts 9% growth in 2004.

One side effect of rising demand is that key components like memory and LCD monitors are in tight supply, keeping prices firm. That will likely keep Dell's gross margins flat or even push them down slightly from the prior quarter.

Yet Dell manages its business to the operating margin line, and on that front results will likely look better. Lehman's Dan Niles predicts Dell's cost controls will lead operating margins to stay flat to slightly up.

As for the January quarter, analysts don't expect much in the way of guidance surprises.

At Goldman, analyst Laura Conigliaro predicts Dell will see sequential revenue growth similar to last year's 6.4%, driving revenue of $11.2 billion. Her 27-cent EPS estimate is a penny below consensus, reflecting higher sequential revenue but also a potentially more aggressive pricing environment, she says.

Less of a Bargain

Despite the uncertain timing of a corporate IT resurgence, Fulcrum's Robert Cihra thinks investors could bid Dell shares higher based on the upswing in the PC market -- although the stock is already fast approaching his $37 price target. Wednesday it closed up 66 cents, or 1.9%, to $35.67.

Year to date, Dell has climbed 33%.

Even investors are hard-pressed to call Dell a bargain. "I wouldn't say you need to go out and buy tons of it. At this point we look at Dell to be pretty fairly valued, at 29 times next year's earnings," notes Ryan Erickson, a portfolio manager for Holt-Smith & Yates Advisors.

Yet Erickson says he'll keep clients in the stock in light of Dell's above-average growth expectations, which he pegs at about 15% to 16% over the long-term and as high as 20% over the next couple of years.

He's bullish on Dell's

October entry into consumer products, a market valued at upward of $60 billion. Erickson predicts that as consumers grow familiar with digital high-tech products, some are likely to make online buys from Dell, having already grown comfortable with the company's PC brand. "If they get any portion of that business, it could be a nice chunk for them," he says.