How the mighty have fallen.

Once upon a time, Dell (NASDAQ:DELL) was considered a growth stock. That may yet happen again one day. But for now, analysts expect the company to contract rather than grow when it reports results for fiscal Q4 and full-year 2007 on Thursday.

What analysts say:

  • Buy, sell, or waffle? Twenty-seven analysts follow Dell. Eleven of them call Dell a buy, 14 more say hold, and two say sell.
  • Revenues. On average, they expect to see quarterly sales slump 2% to $14.88 billion.
  • Earnings. Profits are predicted to fall by a third, to $0.29 per share.

What management says:
Unless you've been living under a rock the past few weeks, anything I tell you about Dell's recent news is going to be, well, old news. Rollins is out. Mr. Dell's back. The rest of Dell is getting sued for allegedly taking pseudo-kickbacks from Intel (NASDAQ:INTC) to use its chips instead of AMD's (NYSE:AMD). The only news item you might have missed -- and only because it's not terribly newsworthy -- is that Nasdaq has permitted Dell to remain listed, on the condition that it file its delinquent financial statements by March 14. If it fails to meet the deadline, there is a serious risk that Nasdaq will ... issue another empty threat, and let Dell file its reports whenever it gets around to it.

What management does:
Against the backdrop of all the C-level comings and goings, Dell's actual business almost gets lost in the picture. But to recap, gross margins are (finally) moving back upwards -- even if they're still lower than they were a year ago. Operationally, however, the firm's decline in profitability continues.

Margins

7/05

10/05

2/06

5/06

8/06

11/06

Gross

18.6%

18.0%

18.4%

18.1%

17.4%

17.6%

Operating

8.8%

8.1%

8.6%

8.2%

7.0%

6.8%

Net

6.6%

6.0%

6.4%

6.0%

5.0%

5.1%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Two Fools say:
And yet, yes, Dell is still an active recommendation at both Motley Fool Inside Value and Motley Fool Stock Advisor, gluttons for punishment that their respective advisors, Philip Durell and David Gardner, are.

Philip observed in his January update that both of the marquee tech market research houses, Gartner and IDC, now agree that HP has displaced Dell as king of the computer-market-share hill -- and he couldn't care less. On the contrary, Philip argues that if HP is taking share from Dell, it's probably doing so by undercutting Dell on price. According to Philip, since Dell hasn't had a lot of success in grabbing market share itself, it might as well "cede less profitable markets to its rivals" and "focus on the high-end market and customer service."

At Stock Advisor, David takes a more primal approach. In his December semiannual review of all his Stock Advisor picks, he writes: "Although it's not usually my style to chase value stocks, I think this is a great time to buy Dell.... I predict the August 2007 issue of Fortune will have Michael Dell on the cover with the headline 'Dell Is Back!'" Heh. Well, Mr. Dell is in fact back. I guess we'll have to wait 'til Thursday to see if his company can come back, too.

To get the Fool skinny on what our advisors have to say about Dell, you can take free trials of each publication. Yes, free. Just click here to claim a trial to Inside Value, and here to give Stock Advisor a whirl.

Fool contributor Rich Smith owns shares of Intel.