Louis R. Miscioscia, Analyst at Cowen, Recommended Buying DELL:

a.  raising fiscal 2009 (ending January) and fiscal 2010 revenue estimates, cutting operating-expenses estimates, and moving to some of the highest earnings-per-share estimates on the street of $1.70 and $2.07, 11 cents and 23 cents above Thomson First Call, respectively.

b. We base this on the success Dell is having in bringing down op-ex, gaining share and growing revenue in consumer, SMB (small/medium businesses) and EM (emerging markets).

c. In the first quarter of 2009 (ended April) Dell cut 3,700 jobs, which should drive $65 million in quarterly op-ex savings. Estimated another 1,900 cuts will take place in the July quarter, which should add an incremental $33 million in quarterly savings, all this could add 10 cents [earnings per share] to fiscal 2009.

d. Expect another 2,225 reduction in headcount by the beginning of fiscal 2010.

e. On the gross margin side, Dell is in the process of launching a new line of consumer retail PCs, which should greatly help improve the marginally profitable retail businesses, adding $30 million quarterly.

f. On the corporate side, the new E-Series notebooks will provide a complete product refresh, the first in years and should increase customer interest and reduce product cost.

g. Believes the shares can outperform the market by 25% over the next year.

Track Cowen’s picks at:

http://trackthepros.com/categories.php?category_id=709