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Dell's A Mess, And Will Continue To Be

Dell will release its fourth quarter earnings after the bell tonight, and despite some draconian cost cuts and a rock-bottom share price, it is an unattractive investment. And will be for the foreseeable future.

Dell shares are trading at a paltry $8, has $4 a share in cash, but can't seem to get its turnaround strategy in gear. PC sales have stalled, there is no digital music player to bolster revenue and profit margins, ala Apple Inc., and the company's rumored entry into the smart phone market hasn't happened yet; even though when and if it does, it'll be so late to the party that it automatically comes at a horrible disadvantage against Research in Motion and Apple .

"People are very spooked around this company, they're spooked about technology spending...Folks are very, very nervous as investors in Dell," Sanford Bernstein analyst Toni Sacconaghi told the Fast Money crew last night. Still, he also says the company is incredibly cheap, he maintains an "overweight" rating on the stock, and he cut his target from $15 to a still seemingly frothy $13.50. Long-term, he says, there still seems to be some opportunity here.

Trouble for investors nowadays is what does "long term" mean? And just because the overall PC industry still has "ample" opportunity for expansion, rival Hewlett-Packard , even with last week's earnings hiccup — with profits dropping 10 percent and PC sales plunging 19 percent, has proven that it can run operational circles around Dell. And I'm not sure a stronger overall PC market becomes the rising tide that floats all boats. It might just float HP and Apple and because of Dell's stumbling, leave that company behind.

Dell generates 60 percent of its revenue from PC sales. It's a market segment plagued by the recession, with customers holding onto aging computers for a longer period of time; and average selling prices continue to fall. Just today in fact, in the Durable Goods report, the government reports a 16 percent plunge in PC sales, the worst performing sector of the report.

That's bad for Microsoft. Bad for Intel . But particularly awful for Dell.

The numbers to watch for tonight: 27 cents in earnings per share on $14.4 billion in revenue. I'm not sure Dell will offer guidance anymore, but if so, analysts anticipate about 17 cents a share on $13.7 billion. Analysts these last few weeks have been falling all over each other cutting estimates ahead of the report tonight. That may indicate to some investors that analysts have become too negative, have cut estimates too deeply and therefore Dell might be poised for some kind of upside surprise. For what it's worth, however, the analysts I'm talking to tell me they're concerned they haven't cut estimates deep enough.

Yuck.

Look for more aggressive cost-cutting from the company on its conference call, and an optimistic tone as Dell continues to work its turnaround strategy. It'll sound good, and shares may even see some upside based on those comments. But for the time being, Dell's got major issues internally and externally, and it's not clear to anyone I've talked to that this company has come up with a way to navigate itself out of its mess.

Questions? Comments? TechCheck@cnbc.com