Earnings Preview: Dell

by: theflyonthewall.com November 20, 2008 | about stocks: DELL    

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Dell (DELL) is expected to report Q3 earnings after market close Thursday, November 20, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 31c for EPS and $16.22B for revenue, down from the July quarter mark of $16.4B, according to First Call. Dell is widely expected to post lower earnings for Q3 as PC shipments slow due to worldwide declines in IT spending. Personal computer shipments from Dell missed analyst expectations for the quarter. To save cash, Dell has instituted a hiring freeze and offered buyouts to employees. The only real question on analyst and investor minds is where Dell's quarter falls on the "ugly" scale.

Analyst Views

Luckily analysts aren't expecting much at all courtesy of competitor Intel's (INTC) Q4 warning. UBS analyst Maynard Um believes Q3 results will highlight the continued signs of a worrisome IT spending environment and expects end-demand softness and lumpiness to last at least a couple of more quarters, with Dell's Q3 results portraying just the beginning of things to come. BMO Capital Markets analyst Keith Bachman says, Dell's biggest problem: It is too reliant on PC sales. And aside from so-called netbooks there's not a lot of growth. Also, Jeff Fidacaro of Merrill Lynch recently cut his 2009 PC unit growth forecast to -2% from growth of 12%. Anything less than "Armageddon" may actually be viewed as positive by investors/analysts.

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