Last week, when Hewlett-Packard (NYSE:HPQ) reported weak sales in the computer hardware sector, the writing was on the wall for Dell (NASDAQ:DELL). Dell's share price took a dive alongside HP that night, expecting the worst.

Well, Dell's numbers are in, and they're soft. Revenue dropped 23% year over year to $12.3 billion and earnings were cut down by 61% to $0.15 per share. That's the bad news. The good news? For one, Dell is still making a profit even at the worst of times. For another, the company looks very well positioned to make a full recovery when the economy shows up again -- and then leverage its market position to become bigger than before.

Or, as Nietzche famously said, what doesn't kill you makes you stronger.

The $290 million of GAAP net income translates into $680 million of free cash flow, and Dell now has $10.1 billion of cash and short-term investments at the ready. Other ultra-rich cash machines like Cisco Systems (NASDAQ:CSCO) and Apple (NASDAQ:AAPL) may play it cool, but Dell's management is not shy about taking advantage of the faltering state of the tech industry.

"You know, asset prices are getting pretty attractive and certainly we are looking at how we are going to expand inorganically," said CEO Michael Dell in the earnings call. The enterprise sector in particular looks like a great place to snap up weaker rivals while they're beaten down. Dell is "preparing for what we believe will be a powerful replacement cycle, with virtualization and our growing managed services capability playing a much larger role as the economy improves."

In that light, I could easily imagine Dell making a play for server hosting specialists like Rackspace Hosting (NYSE:RAX) or SAVVIS (NASDAQ:SVVS), or a networking player of Terremark Worldwide's (NASDAQ:TMRK) class. Dell already has enough expertise and market reach when it comes to the actual server hardware, and might be better off acquiring complementary technologies and services.

The companies I mentioned have been bouncing back from the great crash of 2008 rather quickly, though. If I'm on the right track here, the deals would have to happen rather soon, before the low-cost opportunity passes altogether.

So what do you say, Michael? You can't hide your targets forever.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.