Erstwhile computer king Dell (NASDAQ:DELL), now dethroned by Hewlett-Packard (NYSE:HPQ), reports its fiscal Q2 2007 earnings numbers on Thursday. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? Thirty-one analysts now follow Dell, up two from last quarter. Buy ratings just barely edge out holds, 16-to-15.
  • Revenue. On average, analysts expect to see sales inch up 4% to $14.63 billion.
  • Earnings. Profits are predicted to fall 9% to $0.30 per share.

What management says:
The song remains the same at Dell. The company is still delinquent in its SEC filings. The Nasdaq is still issuing empty threats of a delisting that will never come -- then backing off when its bluff looks like it might get called.  In the latest episode of this saga-of-waiting, Nasdaq gave the company until Nov. 12 to get up to date on its missing 10-Q and 10-K filings, and to restate past filings in need of recalibration. Dell dutifully promised to turn in its homework "by the first week of November."

In addition to the tardy paperwork, Dell plans to restate its earnings for all of "2003, 2004, 2005 and 2006 (including the interim periods within those years) and the first quarter of fiscal 2007." Regarding the restatements, management ultimately expects to report only a 1% reduction in total revenue booked over the past four-and-a-half years, and to subtract about a nickel from earnings that amounted to $4.48 over the period. Free cash flow figures should not suffer "materially."  

Dell's big news this quarter may not concern Dell at all. As fellow Fool Rick Munarriz related yesterday, cow-like competitor Gateway (NYSE:GTW) just went "poof" -- as rival Acer got a bit bigger.

What management does:
It's been a full year since we last saw audited numbers from Dell. By this point, no one's quite certain how the firm is really doing -- least of all the Fool's data provider. It's given up trying to generate trailing-12-month results, but it does recite the quarter-by-quarter numbers included in quarterly earnings releases (shown below). As you'll see, operating margins remain superior to those of, say, Acer, Sony (NYSE:SNE), or Lenovo. But Dell is lagging HP, IBM (NYSE:IBM), and Apple (NASDAQ:AAPL) pretty badly.





























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects performance in the quarters named -- NOT trailing-12-month performance.

Two Fools say:
Dell remains an active recommendation at both Motley Fool Inside Value and Motley Fool Stock Advisor. In each case, before the restatement revelation, our analysts had expressed cautious optimism over Dell's internal accounting probe. The more management told us about the progress of its investigation, the less "there" there appeared to be.

As Inside Value's Michael Olsen put it back in April, before Dell's latest announcement summarizing the effects of its restatement: "In the absence of any meaningful information, we're standing pat on our valuation."

A couple of months later, David Gardner at Stock Advisor seconded that emotion in his June review of Dell: "Barring any horrific revelations from the ongoing audit, we think all this bad news is more than priced into the stock."

Apparently, Mr. Market was thinking along the same lines. Once news broke that the restatement would lop only about a penny per share per year off historical earnings, and not affect future operations, the pressure on Dell's shares immediately began to ease. Two weeks later, the stock is up about 6%.

Has the rise in stock price changed Michael's opinion on Dell's valuation? Will David find something in Thursday's news that affects his estimate of Dell's worth? Claim a free trial to either newsletter, and you can be first to learn the answer after earnings are released on Thursday.

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Fool contributor Rich Smith does not own shares of any company named above. At The Motley Fool, we often repeat -- but never restate -- that we have a disclosure policy .