Closing In On 52 Week Lows, Shares Of Dell Now Too Cheap To Ignore

| About: Dell Inc. (DELL)

Shares of Dell (NASDAQ:DELL) are close to fifty two week lows in after hour trading Tuesday night. The company reported second quarter earnings (earnings call) for the fiscal 2013 year that saw many business segments have large declines in sales. The company does have six acquisitions this year and a growing enterprise business that could power shares higher.

Total revenue in the company's second quarter dropped 8% to $14.5 billion. Gross margins rose 60 basis points to 22.6%. Operating income was $1.1 billion for the quarter. The company saw cash flow of $637 million during the quarter. Earnings per share were $0.50 for the quarter. Analysts were expecting $14.65 billion in revenue and $0.45 in earnings per share. Dell's bottom line earnings beat wasn't enough to keep investors from selling after missing on revenue and seeing big losses in several segmented areas.

The biggest growth for Dell continues to be the company's enterprise solutions and services segment. The segment was responsible for second quarter sales of $4.9 billion. Total sales were up 6%, with a 14% increase seen in the server and networking division. This business segment now represents one third of revenue, and half of gross margins.

Dell saw its IP storage division increase sales by 6% to $416 million. The company is continually working on higher margin areas of services to increase profits. New signings now total $974 million in future revenue.

Some of the negative areas affecting Dell's share price were:

· Global large enterprise sales down 3%.

· Public business sales down 6% due to continued budget cuts at government levels

· Consumer sales down 22%, including a 26% drop in notebook sales

· Lost market share in emerging markets, including a 15% drop in the BRIC region's revenue, and a 12% drop in the ASIA Pacific/Japan region

In 2012, Dell has made six acquisitions to help build future growth. Five of the acquisitions are now officially closed. Here is a look at the acquisitions:

· Wyse - cloud computing

· Make Technologies - services

· Clerity Systems - services

· AppAssure - software, security

· SonicWall - threat management, firewalls

· Quest Software - software, security, set to close in the third quarter

Dell bought back $400 million worth of its own stock. Over 29 million shares were acquired, representing an average share price of $13.74. In June, Dell's Board of Directors also approved a dividend plan for the company. Beginning in the third quarter, shareholders will see a quarterly dividend of $0.08 per share of Dell. This represents a yield of 2.7% annually at today's share price.

In the third quarter, Dell expects revenue to be down 2-5% from the current quarter. This would represent revenue of $13.78 to $14.21 billion. Along with these new quarterly targets, Dell lowered its full year earnings guidance to $1.70 per share. Analysts are targeting earnings per share of $0.48 in the third quarter, from revenue of $14.86 billion. For the fiscal year, analysts see Dell putting up $59.67 billion in revenue. Full year earnings per share are targeted to be $1.91 by analysts. Dell's new guidance is pretty far off from these previous analyst targets. Time will tell if any of the analysts update guidance or lower targets on the company after today's news.

Shares of Dell were down to $11.78 in after hours trading, after losing 1.8% during the day and an additional 4.5% after earnings were reported. The shares now sit slightly above the fifty two week low of $11.39. Shares of Dell are now down 20% on the calendar year and continue to be well off of the $50 price seen back in 2001.

After today's share decline, I think investors should take this chance to buy shares. Here are the key reasons to accumulate Dell shares:

· Launch of Windows 8 should increase number of business and consumer computer purchases

· Revenue from acquisitions should begin hitting earnings in the third and fourth quarters

· Shares trade for less than seven times current fiscal year earnings per share

· The issuance of a third quarter dividend should add Dell to several mutual funds and ETFs and could send shares higher

· Trading close to fifty two week low

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.