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Dissection of Dell's Earnings

Dell just released its numbers and talk about a mixed bag.

On the surface, they look OK. The company reports 30 cents a share on $14.4 billion in revenue. But because of all the turmoil at the company, the Street is all over the map in terms of expectations. Thomson says analysts were looking for 29 cents on $14.89 billion. But Shaw Wu at American Technology Research was expecting 31 cents on $15 billion, and Eric Ross at Think Equity Partners anticpated 30 cents on $15.4 billion.

So, did Dell beat on the bottom and miss on the top?

Kind of.

The 30 cents the company reported includes 6 cents for all the bonuses and other cutbacks that were instituted on the quarter. Put that back in and Dell only reports 24 cents. A sizeable miss. As far as the revenue line is concerned, it's ugly, but the Street expected it to be ugly. Everyone but Brent Bracelin at Pacific Crest Securities who expected the topline to come in at $14.3 billion. So Dell actually beat -- him.

Dell also did well on the gross margin line, coming in at 17.1%. Many on the Street thought the number would be well below 17%. Bracelin was on the high end here at 17%. So Dell beat him again.

But there are some glitches in the report. Dell says it now has 82,000 employees on the payroll, a staggering 3,500 more workers than the fourth quarter of last year. Who are they? Offshore employees? New employees in this country? Who are they? How much do they make? For a company that desperately needs to cut costs, a 26% increase in headcount is distressing at best. Bracelin calls it "excessive hiring."

Dell also reports an 18% plunge in PC unit sales. This at a time when rival HP , which reported earnings last week, showed a 26% jump in earnings and an 11% percent rise in revenue. So now we have concrete facts as to why HP shares have risen 25% over the past year while Dell's shares are off 25% over the same period.

Also of concern: no update of any kind on the ongoing SEC investigation into past accounting practices. And the NASDAQ listing review that could force Dell off that exchange has been postponed until May.

Of course, this report generates far more questions than answers that analysts would've enjoyed posing to the company, and returning CEO Michael Dell. But Dell has scrubbed plans for an analyst conference call. And Dell won't provide guidance for its fiscal first quarter.

Dell investors, as well as those of us in the media, are left to feel our way through the dark, wondering when, or if, the company will offer up the turnaround vision Dell so desperately needs.



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