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Dell's "Hell" Turning Into Hellava Buy?

You gotta hand it to the folks over at Goldman Sachs, but particularly Brent Bracelin at Pacific Crest Securities who issued a note on Oct. 8, raising his estimates on Dell and singing the company's praises as it emerges from a financial purgatory gripping the company for more than a year.

The company finally got all caught up late yesterday,filing four years of quarterly financials and restating net income by cutting $92 million over that period. But that's actually good news since some on the Street had worried the re-statement could cost Dell as much as $150 million. The company also announced that its stock buyback program would begin anew after a long hiatus. There's $1.4 billion left on the company's previously announced repurchase program, so that stands to buoy shares as well.

But lets get back to the recent notes. Goldman adds Dell to its "conviction buy" list on Monday. But Pacific Crest raised estimates almost THREE WEEKS AGO, on Oct. 8. His thoughtful comments detailed Dell delivery times on the company's notebook PCs fell from a jaw-dropping 29 days to a far more customer friendly 10 days.

He also reported that 72% of the 194 Wal-Mart stores that the firm polled, had Dell notebooks in stock; the favorable component pricing that benefited Apple Inc. so nicely this past quarter should also be a nice benefit to Dell, particularly DRAM pricing which fell as much as 35% on the quarter. We've already gotten particularly optimistic comments from one of Dell's key chip suppliers, Intel , about the upcoming few quarters, which also bodes well for the company. Dell is also seeing a nice build-up in its nascent retail strategy, with the company's PCs now in 3,000 retail locations around the world. Bracelin's target is $36 a share.

This is a far cry from the brutal news cycle this company has undergone: financial shenanigans, accounting irregularities and top executive departures including the company's CEO Kevin Rollins who left under a cloud. Also, there was no clear long-term strategy yet conveyed by prodigal founder Michael Dell who now controls the C-suite once again.

But now there are compelling signs of life at the company even if its consumer business might be slowing: Accounting for only 9% of revenue ($1.3 billion), but that's down from the 12.6% for the same period a year ago. Declining consumer revenue is indeed a problem, but with a healthy Microsoft Vista upgrade cycle underway, it's possible the company can absorb that slowdown with better business from the enterprise.

Should it persist though, that could be concern. This holiday shopping season will be crucial. Apple and HP continue to hum along. Dell continues to sputter. But for the first time in well over a year, the sputtering may be petering out.

The company hosts its shareholder meeting the first week of December. That should be interesting. It'll hold its first analyst meeting with he Street in recent memory next April. That should be even more interesting. The fact is, Dell is clawing its way back. Not overnight. Not in a week. Or month. Or even year. But shares are now ahead of their 52-week high and would seem there's a brand new emotion wafting its way 'round Round Rock, Texas: Optimism.

Questions? Comments? TechCheck@cnbc.com

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