Mo, this quarter for Dell's bulls and bears is as clear as I can remember ...
Many analysts, bears have successfully defined the argument as: How fast will Dell's revenues grow this quarter? Like it or not, big emphasis will be placed on that number...
The bears seem to be looking for Dell to grow revenues less than 40% y-o-y....and somewhere near 36%....if Dell grows revenues in the 30's..it will give the bears plenty of ammunition to claim that Dell's growth rate has slowed (at what they would say) is a considerable rate....If Dell would come in with y-o-y revenue growth of 33-39%, I would agree that the slowdown has been considerable...and, certainly, this would effect the stock. Maybe not by taking it down very far, but slowing its upward growth over the next quarter...
I think both bulls and bears expect Dell's earnings to come in y-o-y between 45-50%...The closer to 50% the better for the bulls...over 50%, good ammo for the bulls...I think both expect a bullish forward from the CC...
Bulls are looking (I believe) for y-o-y revenue growth somewhere in the 40's...45% y-o-y revenue growth would be exceptional..and I think would severly dent the bears "Dell is growing in the 30's argument" for at least a quarter....A more likely "positive scenario" for the bulls, Dell will grow revenues from 42-44% y-o-y....Now, the closer Dell grows revenue y-o-y 40%....the more the bears will howl...
Between 40-42% will give some deadlock between bulls and bears...
Hopefully I am doing my calculations right here, but it appears that 39% y-o-y revenue growth would get us 5.45b, which would represent 5.4% sequential growth...pretty average...but given last quarter's disappointment, Dell indicating that 200m was shifted in Q1, Dell indicating that the pricing problem Dell suffered in Q4 has been solved, "the best order log at the beginning of a quarter (ever? in a long time?), TM "very robust" year, "very healthy"......It is entirely reasonable for bulls to expect that Dell will not grow revenues (y-o-y) in the 30's this quarter....I think Michael Dell knows this, and there will be revenue growth (at the expense of earnings) to get the number in the 40's (if necessary)...
42% y-o-y revenue growth would represent 5.56b and a sequential increase of 7.65%...That would be a solid, actually really good performance, and would show that things are on track at Dell...however, I'm sure the bears would find something to pick at there...after all, there game is to set the bar to the highest point possible...even impossible heights, so that the disappointment is as great as possible...
So, to recap, below 40%, bears have the edge...the closer to 36%, the stronger the case for the bears......between 40-42%, I guess bears will find stuff to nitpick...but I think most fund managers, analysts will feel pretty good....given all the "Dell in the 30's hype"....and 43% and above, smart money will be real happy, IMO..
I reckon revenue growth between 40-42% y-o-y, 45-49% earnings y-o-y, and EPS of .16 is the most likely possibility...
However, would love to see 43% y-o-y revenue growth, 50% earnings y-o-y, and .17 earnings...
All this, of course, is very short-term thinking....and my comments are focused only on the short-term price movement...in the long-term, I remain very bullish on Dell's prospects...
Hope I haven't jinxed anything here... |
