Dell Inc. (DELL)

Dell Inc. (DELL) missed its earnings expectations today and looks to be expensive even after a 12% drop in stock value. Analysts were looking for 36 cents a share but the company could only earn 31 cents for the previous 3 months.

Announcement
The announced earnings were weak and the gross margins came in tighter than had been anticipated. An expected gross margin of 18.4% was not met as the company reported a lower 17.2% gross margin. The company has now missed 3 out of the last 4 quarters and analysts are decreasing their expectations for the full year accordingly.

Value
If the company can grow at the 21.4% rate that had been expected then the current price/earnings ratio of 16.25 is a decent price. But the growth is not coming in as high as anticipated which makes the current P/E questionable and could lead to further decline in stock price. Facing tough competition overseas and having to reduce its margins to compete on price in new markets is the contributing factor to a reduced earnings outlook.

.ig_tbl_img .ig_smbluetext{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:9px;}.ig_tbl_img .ig_lgbluetext{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:12px;}.ig_tbl_img .ig_smbluelink, .ig_tbl_img .ig_smbluelink:link{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:9px;text-decoration:underline;}.ig_tbl_img .ig_lgbluelink, .ig_tbl_img .ig_lgbluelink:link{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:12px;text-decoration:underline;}.ig_tbl_line .ig_smbluetext{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:9px;}.ig_tbl_line .ig_lgbluetext{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:12px;}.ig_tbl_line .ig_smbluelink, .ig_tbl_line .ig_smbluelink:link{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:9px;text-decoration:underline;}.ig_tbl_line .ig_lgbluelink, .ig_tbl_line .ig_lgbluelink:link{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#0000cc;font-size:12px;text-decoration:underline;}.ig_smbluelink:hover{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#3366cc;font-size:9px;text-decoration:underline;}.ig_smbluelink:visited{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#551a8b;font-size:9px;text-decoration:underline;}.ig_smbluelink:active{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#ff0000;font-size:9px;text-decoration:underline;}.ig_lgbluelink:hover{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#3366cc;font-size:12px;text-decoration:underline;}.ig_lgbluelink:visited{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#551a8b;font-size:12px;text-decoration:underline;}.ig_lgbluelink:active{font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:normal;white-space:normal;color:#ff0000;font-size:12px;text-decoration:underline;} .ig_tbl_img table,.ig_tbl_img tr,.ig_tbl_img td,.ig_tbl_img a,.ig_tbl_img span,.ig_tbl_line table,.ig_tbl_line tr,.ig_tbl_line td,.ig_tbl_line a,.ig_tbl_line span,ig_reset{margin:0;padding:0;padding-left:0;padding-right:0;border:0;border-collapse:collapse;float:none;clear:none;width:auto;height:auto;background:transparent none;background-position:0%;font-family:arial,sans-serif;font-variant:normal;font-style:normal;word-spacing:normal;letter-spacing:normal;vertical-align:middle;text-transform:none;text-indent:0;line-height:1.0;white-space:normal;top:auto;bottom:auto;}

DELL Inc.

Last 5 posts by Steve Patterson

• Research In Motion Has Growth - April 17th, 2009
• Gold Rallies on Economic Uncertainty - February 20th, 2009
• Sony Layoffs - Sony Corp (NYSE: SNE) - December 9th, 2008
• comScore: Online is Still Hot - December 3rd, 2008
• Short the United States Oil (AMEX:USO) ETF - November 6th, 2008