Earnings Preview: Dell Inc. - Analyst Blog
19 Février 2013 - 4:01PM
Zacks
Dell Inc. (DELL) is set to report
fourth-quarter 2013 results today, Feb 19. Last quarter, the
company did not come up with any positive surprise, affected by the
downturn in tech spending and PC business. Let’s see how things are
shaping prior to this announcement.
Growth Factors This Past Quarter
Amid all the macro uncertainty and the PC market slowdown, Dell
opted for a leveraged buyout (LBO). Once the deal is finalized Dell
would be transformed from a public company to a private firm.
The LBO agreement was inked between Dell, Microsoft
Corp. (MSFT) and Silver Lake Partners (a private equity
firm). The purchase price of $23.0 billion will be funded with
debt. Founder Michael Dell will give up his 15.7% stake and fork
out an additional $700.0 million in cash, $2.0 billion will come
from Microsoft and $1.0 billion from Silver Lake. The purchase
price comes to $13.50 to $13.75 a share. Currently, Dell is trading
at $13.27.
The privatization is expected to help the company stay away from
public scrutiny so that it can focus more on business growth and
profitability. However, the problem related to Dell’s PC business
remains. Further, Dell’s position in the server, storage and cloud
computing segments is rather weak when compared with technology
stalwarts like IBM Corp. (IBM) and
Hewlett-Packard Co. (HPQ).
Considering the situation, it is hard to predict Dell’s success
story, unless the company opts for diversification.
Earnings Whispers?
The Zacks Consensus Estimate for the fourth quarter stands at 39
cents, while that for fiscal 2013 stands at $1.71.
Dell has beaten estimates in three of the last four quarters,
with a trailing four-quarter average positive surprise of
2.30%.
Estimate revisions have been minimal, with only one downward
estimate revision in the past 60 days. As a result, the Zacks
Consensus Estimate has remained unchanged for the fourth quarter as
well as for fiscal 2013, over the last 60 days. Over the last 90
days, however, the Zacks Consensus Estimate has gone down 1 cent
for the fourth quarter of 2013 and up by 1 cent for fiscal year
2013.
Dell shares carry a Zacks Rank #4 (Sell). The sell rated stocks
(#4 and #5) should never be considered going into an earnings
announcement.
Other Stocks To Consider
Here are a few buy-rated stocks (Zacks Ranks #1 and #2) that may
be worth considering at this point:
Symantec Corp. (SYMC) with a Zacks Rank #1
(Strong Buy).
CA Inc. (CA) with a Zacks Rank #2 (Buy).
CA INC (CA): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
SYMANTEC CORP (SYMC): Free Stock Analysis Report
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