gizelle,
What server sales mean to HP is very different from what server sales mean to DELL. Completely different market segment, pricing, margin and services revenue patterns. TBH, I didn't find the HP report to be a great positive for DELL (just as I didn't find the IBM report to be a great positive for DELL either). Neither report shows IMHO improvement in the specific market segment (relatively lower end and w/o services revenues) that DELL still derives majority of it's earnings from at present (the future may be a different story). Of course, this may mean that DELL is simply kicking rear ends in this particular segment as the IDC and Dataquest numbers indicate. But there is clearly an element of uncertainty here.
That said, I expect a revenue of 5.6-5.7 BB (a sequential 5-6% growth from the 5.2 BB of last quarter plus the rumored big order which rolled over to Q1, adjusting for April - a better month - substituting for January). While this would generally translate to an EPS of 17 cents I expect a boost from share buybacks as the price has been really depressed this quarter. If outsiders like me could have made upwards of 100% by trading derivatives when DELL fell (twice) to the mid 30's, I would expect the company to be rather aggressive as well. Note that the May 35's which commanded a premium of 3 something in early April is virtually worthless now (was Ed selling them by any chance?). While money from put sales do not show up in earnings as CTC has explained, if used in share buybacks they so show up in EPS. Such share buyback will probably be worth a cent IMO. Of course, it is a conjecture on my part that DELL did buy back shares at depressed prices going by their track record. I may be completely wrong here.
Anyway, 5.6-5.7 BB/18 cents EPS is what I am predicting. In which case, I would expect DELL to trade at a forward PE of 60 which gives a share price of about 51-52. Add in momentum from short covering, fear of being left behind and what not, which together may very well push DELL to 60+ in the short term. All IMHO and not meant as trading/investing advice.
-BGR (still patietly holding '01 85's bought for a shade above 4, bidding 6 and a quarter recently).
Edit: The only downside I see is that LT has been pondering over buying QQQ calls. ;-) |
