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Take Your Position: Dell

Investors are getting ready for earnings from Dell due Thursday after the bell. What must you know to game this stock?

Many traders will be keeping an eye on PC shipments after research groups IDC and Gartner both said – industry wide – shipments have edged up after six months of decline.

However, they also dropped Dell’s ranking – saying it’s now the world's third largest PC maker by shipments. (Hewlett-Packard. remained No. 1, and Taiwan's Acer Inc. moved into the No. 2 spot.)

Traders will also be looking at the integration of Perot Systems, which Dell bought earlier in the year for about $3.9 billion, a move that will help it expand beyond the core PC business and better compete with H-P.

The acquisition will bring Dell more than 1,000 customers in a wide range of sectors, from government to manufacturing and financial services. About 48 percent of Perot Systems' revenue comes from the health care industry and 25 percent from government.

Also during the quarter, Dell agreed to pay $4 million to settle a lawsuit in New York state over deceptive advertising of promotional credit financing and warranties. Dell acknowledged no wrongdoing in the settlement.

Meanwhile, analysts surveyed by Thomson Reuters expect Dell to post a profit of 28 cents per share on $13.1 billion in revenue.

All things considered, what’s the trade?

As far as I'm concerned the Dell earnings trade is all about margins, says Bernstein analyst Toni Sacconaghi. If margins go up I’d expect the stock to do well but if margins only tread water then I’d expect the stock to be flat at best.

What do you think? We want to know!


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Trader disclosure: On November 18th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (POT), (NUE), (AAPL), (BAC), (EEM), (GE), (INTC), (FXI), (VIP); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (FLS); Finerman's Firm Owns (MSFT), (NOK), (PLCE), (TGT), (WMT), (DRI); Finerman's Firm Is Short (USO), (IJR), (MDY), (IWM), (UNG); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (FLS), Is Short (FLS) Calls; Najarian Owns (DELL) Calls; Najarian Owns (EXPE) Calls; Najarian Owns (FXI) Call Spread; Najarian Owns (INTC) & (INTC) Calls; Najarian Owns (LAZ) & short (LAZ) Calls; Najarian Owns (MCD) Call Spread; Najarian Owns (RIMM) Call Spread; Najarian Owns (QLOGIC) Call Spread; Najarian Owns (TXN) & Short (TXN) Calls; Najarian Owns (YHOO) & (YHOO) Puts; Najarian Owns (BG) Call Spread; Najarian Owns (TXN) & (TXN) Call Spread

For Jon Najarian
J. Najarian Own (PALM)
J. Najarian Owns (ADS)

For Doug Kass
Kass Owns (BAC)

For Toni Sacconaghi
Sanford Bernstein Owns (DELL)
(DELL) Was A Client Of Bernstein In Past 12 Months
Sanford Bernstein Makes A Market In (DELL)


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