Show me the penny, Miltie. Danny, the plumber, has reason to believe you have a shiny penny from July.
Will Dell dazzle?
High-tech bellwether Dell Computer will take to the earnings stage Tuesday after the market closes. Wall Street will be looking for the world's No. 1 direct computer vendor to post a second-quarter profit of 17 cents a share.
In the year-ago period, the Round Rock, Texas-based company (DELL: news, msgs) said earnings increased 72 percent to 50 cents. Net income was $346 million. Revenues increased 54 percent to more than $4.3 billion.
In a note to clients, BancBoston Robertson Stephens analyst Dan Niles said he expects Dell to earn 17 cents a share, but he said the potential of a penny of upside is "reasonable."
"We believe the strength seen in July, albeit with heavy pricing pressure, may have been enough to allow for a slight upside," he said.
Last quarter, the company said revenue was $5.5 billion, up 41 percent from the year-earlier quarter. At that time, the company's guidance for sequential revenue growth was 5 percent in the second quarter, or 35 percent on a year-over-year basis. Niles is expecting revenue for the second quarter to hit $5.86 billion.
Analysts will also be keeping an eye on gross margin, or the amount of money earned per dollar of revenue. Dell surprised Wall Street analysts last quarter with news that gross margins fell to 21.5 percent from 22.4 percent in the previous quarter due to the squeeze of an aggressive PC pricing environment. See archived story.
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"If margins are stable, then the stock will probably get a good boost on the back of that," Jonathan Ross, an analyst at ABN Amro. "If they continue the declines from the prior quarter, then, even if they make the numbers, the Street could be slightly, shall we say, exacting."
A year ago, Dell posted a gross-margin increase to 22.7 percent from 22.2 percent a year earlier.
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