Tomorrow, Dell
What analysts say:
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Buy, sell, or waffle? A whopping 29 analyst firms follow Dell, with 13 buy ratings, 13 holds, and three sells between them. In our Motley Fool CAPS investor community, Dell is a two-star stock, based on over 3,300 user ratings.
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Revenues. $14 billion would satisfy the consensus forecast, though that's 2% less than last year's sales.
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Earnings. The average analyst estimate is $0.26 of earnings per share, down from $0.33 a year ago.
What management says:
Newly reappointed CEO Michael Dell aired his frustration with recent results in the latest preliminary earnings report. "We are disappointed with the company's results," he said, "but what matters is our future plan of action. We are systematically moving to increase efficiencies, improve execution, and transform the company."
What management does:
Mike has good reason for his frowny face. Dell, a company known for its highly efficient operations, has seen its already-slim margins shrivel up a bit more lately. Add in slower sales growth trends and you get shrinking net earnings. Uh-oh.
|
9/2005 |
1/2006 |
4/2006 |
7/2006 |
10/2006 |
1/2007 |
|
|---|---|---|---|---|---|---|
|
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% |
|
Y-O-Y Growth |
9/2005 |
1/2006 |
4/2006 |
7/2006 |
10/2006 |
1/2007 |
|---|---|---|---|---|---|---|
|
Revenue |
16.3% |
14.6% |
13.6% |
11.1% |
8.8% |
6.8% |
|
Earnings |
17.3% |
3.3% |
17.4% |
4.7% |
(16.9%) |
(8.5%) |
One Fool says:
To add insult to injury, Dell's share price has stayed essentially flat over the last year, at a time when rival Hewlett Packard
HP also recently stole the overall PC sales crown from Dell, which had owned that particular piece of bling for years on end. And remember that I mentioned preliminary results -- this is yet another company under SEC investigation for past stock options-granting mishaps.
The challenge for Dell is to regain lost market share without demolishing margins with too-deep discounts. Being a lean organization already, there just isn't a whole lot of fat to trim -- or at least, there shouldn't be.
Don't expect bells and whistles, a full cash flow statement, or any other of the standard trappings of a major earnings announcement tomorrow. You're more likely to see yet another tentative sales and income report, with some color on the whys and the wherefores. For anything beyond that, you'll have to wait for the end of that options accounting review.
Dell is both a Motley Fool Inside Value pick and a Motley Fool Stock Advisor recommendation -- warts and all. Is this stock perhaps a greater value today than ever before? Grab a couple of free 30-day trial passes and find out what our top analytical minds think.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.
