Foolish Forecast: For Whom the Dell Tolls

Dude, you're getting a Dell (Nasdaq: DELL  ) earnings report! Thursday afternoon! Are you excited yet? Read on to learn whether you should be.

What analysts say:

• Buy, sell, or waffle? Twenty-nine analysts follow Dell, one fewer than last quarter. They give the stock 14 buy ratings, 11 holds, and four sells.
• Revenue. On average, they expect to see sales rise 5% to $16.4 billion.
• Earnings. Profits are predicted to drop 6% to $0.32 per share.

What management says:
Never mind what Dell management says. The most current picture of the PC market today comes instead from archrival Hewlett-Packard (NYSE: HPQ  ) , which released preliminary earnings numbers this morning. Without going into too much detail (fellow Fool Tim Beyers covered the bases on this report), H-P reported market share gains (from Dell? Lenovo? Apple (Nasdaq: AAPL  ) ?), better-than-expected earnings, and raised guidance for the rest of this year.

What management does:
That provides a stark contrast to the story at Dell, where we've watched gross, operating, and net margins slide for some time now.

Margins	5/07	8/07	11/07	2/08	5/08	8/08
Gross	17.0%	18.3%	18.7%	19.1%	18.8%	18.2%
Operating	5.3%	5.8%	6.0%	5.9%	5.8%	5.6%
Net	4.4%	4.8%	5.0%	4.8%	4.8%	4.4%

One Fool says:
Further confusing the picture, the last we heard from Dell, things were getting worse. Back in August, Dell ended its Q2 earnings report with a forecast of "continued conservatism in IT spending in the U.S." In September, Dell warned that this "conservative" demand was "further softening" in Q3.

Since then, we've seen Dell's pessimism confirmed both upstream and downstream in the retail channel, in the form of earnings warnings from both Intel (Nasdaq: INTC  ) and Best Buy (NYSE: BBY  ) . And yes, I suppose you could call Circuit City's bankruptcy filing a warning of sorts as well.

Despite the pessimistic outlook, though, Dell also told us in September that it expected to grow faster than the industry for the full year. H-P's report of market share gains, however, suggests that that may not be how things are playing out. Tune in Thursday, and we'll see whether Dell can help us make any sense of this mess.