×

The Last PC Play Of Summer

With shares up about 32% over the past three months, how should you game Dell ahead of earnings on Thursday?

It seems investors have turned somewhat bullish on the company since Michael Dell resumed his role as chief executive in 2007.

Despite Dell’s cachet, his company has struggled during the downturn as businesses hold off on big ticket purchases, and cash strapped consumers opt for cheaper models such as netbooks which are smaller and less profitable.

Dell, the No. 2 PC maker in the world behind Hewlett-Packard Co., has said demand for computers, servers and other technology appears to have stabilized, but did not hazard a guess as to when the global PC market might turn around.

What should you expect from earnings?

Analysts surveyed by Thomson Reuters expect Dell to post a profit of 23 cents per share on $12.6 billion in revenue.

Broadpoint AmTech analyst Dinesh Moorjani wrote in a research note Monday that the quarter "likely ended better than anticipated as PC sales were stronger than expected in the month of July."

Moorjani upgraded Dell to "Buy" from "Neutral," writing that he is more optimistic about upcoming PC demand and that he thinks the shift to lower-priced PCs has "played out for the most part."

Meanwhile, Goldman Sachs analyst David Bailey wrote in an Aug. 13 research note that "investors' concerns related to the company's outsized exposure to enterprise customers and near-term gross margin pressure are mostly reflected in the stock's underperformance."

UBS analyst Maynard Um doesn't see it that way. I would not be a buyer, he tells the Fast Money desk. I’m concerned about IT budgets into the second half of the year. Computers are still low on the totem poll in terms of IT spending priority. 80% of Dell's revenue comes from enterprise so I think there's risk going into the second half of the year.

What do you think? We want to know!

______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send your e-mail to fastmoney@cnbc.com.

Trader disclosure: On Aug. 26th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Terranova Owns (AMZN), (MSFT), (SU), (XOM), (WFT); Terranova Owns (CCL) Puts; Terranova Is Short (SHLD), (EES); Adami Owns (AGU), (C), (GS), (INTC), (BTU), (MSFT), (NUE); Cortes Owns (SPX), (GS); Cortes Is Short Nasdaq 100; Cortes Is Short (JPM); Najarian Owns (BAC); Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian Owns (C) Calls; Najarian Owns (FCX), Is Short (FCX) Calls, Owns (FCX) Puts; Najarian Owns (HGSI) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (TXT) Calls; Najarian Owns (TEVA); Najarian Owns (V) & Short (V) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (XHB) Call Spread