Some rough calculations:
Last quarter, 5.537B rev. on 2.45M units= ASP, 2260, net margin= 7.8%, net income 434m, shares out = 2738, EPS= .16 (15.9 cents)
This quarter, rough estimates....if units 2766M times estimated ASP, 2200 (2.65% sequential decline)= 6.085B rev. (40% increase y-o-y, 9.9% sequentially) x 7.8% net margin (flat, in keeping with Meredith's forecast)= 475m net income (37% increase y-o-y) / shares out 2722 (Dell has been buying back, on average, between 12m-20m last few quarters)=
.1745...don't know if you can round to .175, and therefore, .18....
Hopefully, Dell will buy back enough shares (20m?) to make the round up work, if this is the case....or a .1% uptick in net margin could get us there....
A few factors:
(1) Did margins stay flat sequentially? Meredith, on the last CC, was pretty emphatic about margins staying flat..I do believe he mentioned expansion (sites) and expansion (other brand extentions), as reasons for flatter margins the rest of the year...HOWEVER, in the same CC, Meredith ALSO predicted mid-single digit revenue sequential increase for this quarter...and it looks like, in any event, it will be HIGH single digit (maybe even eeking double digit) BUT NOT mid-single digit...so looks like he was too conservative, at least in that case...
Perhaps again, Dell & crew were trying to lower the exceedingly high expectations to a lower level (a la Microsoft), hence the comment about margins being flat (going forward)..
Or perhaps it is darn hard to nail (even a 3-month forecast) when you are running a 20B+ company in a competitive industry....Too many variables...
From antecdotal data, it appears components prices fell fast last quarter, BUT prices were rather bouyent (sp?)...this could mean greater margins for the quarter (had Meredith anticipated this in the CC? Dunno..)...but, also, we know Dell aggressively went after Compaq last quarter (share)...did they sacrifice (significant) margin to win business?? Who knows??
Although Compaq may not have been as aggressive in pricing in Q2 (compared to Q1), it is possible that IBM made up for it (with its own aggressiveness)..Net/net, positive for Dell? Who knows?
What incremental role do investments in RedHat, Dr.Koop, etc add to the bottom-line? Could this investment/interest income have added 5/10 million to the bottom-line (enough to push us in a rounded .18)?
How 'bout storage, services?? Could they add the incremental "oompf" to keep ASPs high, or driven revenues even greater than expected (40% y-o-y)..
The answers to these questions I do not have....What would make me happy is an .18, I must say... |
