July 18, 2011 - Dell Inc. provides integrated technology solutions in the information technology (IT) industry worldwide. The company designs, develops, manufactures, markets, sells, and supports mobility products, including laptops, netbooks, tablets, and smartphones; desktops PCs; and servers and networking products.

In addition, the company provides third-party software products consisting of operating systems, business and office applications, anti-virus and related security software, and entertainment software; and peripherals, such as printers, televisions, notebook accessories, mice, keyboards, networking and wireless products, and digital cameras.

It also offers IT and business services, including transactional services, such as support, managed deployment, enterprise installation, and configuration services; outsourcing services comprising data center and systems management, network management, life cycle application development and management, and business process outsourcing services; and project-based services consisting of IT infrastructure, applications, business process, and business consulting services, as well as offers asset recovery, recycling, and applications maintenance services.

Further, the company provides financial services, including originating, collecting, and servicing customer receivables related to the purchase of its products. Dell Inc. sells through sales representatives, telephone-based sales, and online at dell.com, as well as through indirect sales channels. The company was founded in 1984 and is headquartered in Round Rock, Texas.

Dell took a beating in the Big Drop of March 2009, going from $26 in mid 2008 to a low of $7.80. Earnings went from $1.25 in '08 to 73 cents in '09. It's had several miscues along the way: late to the party with laptops among them. Critics don't believe Dell "gets it" when it comes to innovative products or ones that will drive new technology directions. Still, consumers and businesses keep buying Dell products. Earnings have rebounded and look strong for this year and next. Can it keep delivering better numbers or will it miss once again?

Right now, earnings look good. For 2010, the company finished with $1.59 (fiscal year ends in January). For 2011, 36 analysts have an estimate of $1.91 (with a range of $1.61 to $2.10), then see $1.93 for 2012 (with a range of $1.43 to $2.13). That's a fairly wide spread, suggesting some analysts believe and some don't. Next quarterly earnings will be out on August 16. Expect 48 cents for the second period, 50% above the 32 cents of last year's second. For the third, analysts forecast 45 cents vs 45 cents last year in the third.

First quarter sales were up only 1% but earnings continued their upward trend, thanks to cost cutting. Earnings per share were 55 cents compared to 17 cents in the first of 2010. That was a 25% upside surprise to analysts' estimates of 44 cents. Positive surprises have been the norm for the last 4 quarters with earnings beating estimates by 6.7%, 36.4%, 43.2% and 25% respectively. Reasons for better earnings include more efficient supply-chain performance, elimination of lower margin products, adding more high-margin products and lower component costs. Sales were dampened by lower spending by government entities and consumers.

But that's all over now. Back to school season will start soon. And there are new products rolling out which should get consumers looking again. And businesses have been busy upgrading their IT departments, replacing much of their hardware. That should continue for several more quarters. There's a dedicated salesforce just for that effort.

Management stated it expects sales to grow by 5% to 9% this year while operating margin would be 7%. Last year it was 7.2%. Analysts see operating margins widening to 8% this year. With its lower operating costs, those targets should be reached. That suggests its stock repurchase program can continue which helps boost earnings. Also, funding for R&D could grow.

Essential numbers: Market Cap is $31.71 billion. Trailing P/E is 10.05 while Forward P/E is 8.70. Price to book is 3.79. Operating margin for the last 12 months was 6.87% and Profit margin was 5.26%. Return on equity was an enviable 45.47% and Return on assets was 7.15%. Total revenues were $61.64 billion. There's $14.48 billion in cash for $7.67 a share. Total debt is $7.61 billion. Current ratio is 1.57. Book value per share is $4.41. Beta is 1.42. In the last 52 weeks, the stock is up 22.36%. There are 1.89 billion shares Outstanding with a Float of 1.61 billion. Insiders own 12.13% of the stock and Institutions have 71% of the Float. There is no dividend.

This stock has been range bound for the last 2 1/2 years, trading between $11 and $17 a share. It's starting to trend higher, thanks to better earnings and prospects. It's P/E ratio is at an all-time low. It has lots of cash. And that ROE makes this stock look great on paper. But investors still remember all the misses Dell had as IT evolved. Whether it can deliver the new products needed to stay up with the latest technology will determine how well this stock performs.

- Company Web site: www.dell.com

   Ted Allrich