Earnings Preview: Dell

| About: Dell Inc. (DELL)

Dell (NASDAQ:DELL) is expected to report Q2 earnings after market close Thursday Aug. 28,  with a conference call scheduled for 5:00 pm ET.


The consensus estimate is 36c for EPS and $15.95B for revenue, according to First Call.

Analyst Views

Dell is down a little over 2% ahead of its scheduled earnings report after the close of trading today. Dell is expected to report strong PC sales, however, some analysts are concerned with its margins as the company slashes prices on its notebooks. PC sales are expected to be a key barometer of Dell's health, as the market is looking for signs that the company has regained some of the momentum it lost in recent years to its top rival, Hewlett-Packard Co (NYSE:HPQ).

There have been some recent examples of Dell getting back on track, as the company's second-quarter PC shipments rose 22% over the prior-year, and its total market share rose almost 1% to 15.6%, according to technology research firm Gartner.

Thomas Weisel's analyst Doug Reid said in a note to clients, "while we have a more favorable view on Dell's revenue outlook for the second half of 2008, we remain concerned that Dell remains aggressive on pricing as the company attempts to penetrate major channel distributors and manage the company's spiraling number of product SKUs."

Bernstein Research's Toni Sacconaghi said he expects strong sales growth, but that Dell's earnings improvements will be a key question that the company needs to answer. Sacconaghi said, "Pricing remains a wildcard, given Dell's burgeoning retail business and the strong growth of lower cost notebooks."

On a positive note, Dell executives have been enthusiastic at recent investor meetings about the company's opportunities in the second half of the year, and the Chief Executive, Michael Dell, bought $100M worth of the company's stock during the recently completed quarter.