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Thursday, February 28, 2008

Dell 4Q:2008 Results

Dell misses revenue forecasts by 300mm, coming in at 16 billion. Corporate spending is slowing, particularly in the financial vertical. Does that sound surprising? Of course banks are reigning in spending – they're under siege.

There's no revenue or earnings guidance and that's concerning. Dell for the last few years has been adding ancillary products to the model to drive the top line – they did it with printers (LXK) and with storage (EMC). They tried to do the same with flat panels and failed. In some respects, the struggles the company are going through are a result of that failure in flat panels to drive the top line.

Beware the possibility of revenue guidance down 7-10% sequentially for next quarter which would be in line with normal seasonality and far below analysts consensus of down 3-4%. They're also talking about substantial costs associated with business realignment. The stock is $20.35 now and I'd be a seller into the conference call.

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