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Guy Adami: Time to Take Profits in Dell

Shares of Dell surged 5% in extended trade after the beleaguered computer maker reported earnings that easily surpassed Street expectations.

By the numbers Dell reported first-quarter earnings of 55 cents a share, excluding one-time items. Dell earned 30 cents a share on the same basis during the same period a year earlier.

The company was seen earning 44 cents a share on revenue of $15.41 billion, according to a consensus estimate from Thomson Reuters.

Also, sales for the most recent quarter reached $15.02 billion, up from $14.87 billion last year and Dell reported an adjusted gross margin of 23.4 percent.

How should you trade it?

Guy Adami thought margins were excellent and guidance was okay, but says “I don’t know if it justifies the after hours moves we’re seeing. If you’re long I’d take profits.”

Joe Terranova suggests a mean reversion trade. He thinks we're near a time when, “I’d be a buyer of HP which has been obliterated and sell Dell against it which has performed so well.”

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HEWLETT PACKARD WOES

Elsewhere in tech the traders were also closely watching the action in Hewlett Packard after the tech titan cut its financial forecasts due to problems stemming from Japan's earthquake, soft PC sales and reduced expectations for its services business.

By the numbers, HP cut its full-year profit forecast to "at least $5.00 per share" excluding items from previous outlook of "$5.20 to $5.28" and cut full year revenue outlook to $129 billion to $130 billion from $130 billion to $131.5 billion.

The news comes the day after Bloomberg cited Apotheker warning of "another tough quarter" and an unaffordable headcount plan.

What’s the trade?

Guy Adami thinks $36 is the floor in this stock. “All the bad news in HP is probably out. I think it gives you a tradable bottom.”

"The stock price suggests to me there’s a huge crisis of confidence," says Karen Finerman. "Valuations are attractive but it will probably take a long time to get past that crisis of confidence."


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TOPPING THE TAPE: BANKS

Financials led the turnaround on Tuesday after JPMorgan CEO Jamie Dimon made bullish comments about the prospects for the economy -- and for JPMorgan itself at the company's annual meeting.

What’s the trade?

Karen Finerman thinks the valuation in JPMorgan is attractive though she admits banks broadly have been under pressure for quite a while. "I own it here, I like it here and I would be a buyer here," she says.

Brian Kelly is bullish banks. "For me it's about loan demand," he says.

Guy Adami is watching Goldman which he says didn't perform well on Tuesday. "My sense is there's still further downside pressure on GS."



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Trader disclosure: On May 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova Owns (OXY); Terranova Owns (XOM); Terranova Owns (KSS); Terranova Owns (BJ); Terranova Owns (DIS); Terranova Owns (TM);Terranova Owns (MCD); Terranova Owns (PEP); Terranova Owns (PFE); Terranova Owns (BAX); Terranova Owns (V); Terranova Owns (JPM); Terranova Owns (VRTS); Stutland Owns (INTC), Is Short (INTC) Calls; Stutland Owns (GLD); Stutland Is Short (GOOG) Put Spread, Is Long (GOOG) Call; Stutland Owns (SLV) Put Spreads, Is Short (SLV) Calls, Owns (SLV); Stutland's Firm Makes Markets In SPX Options, Holds Hedged e-Mini And Options Position; Stutland's Firm Makes Markets In VIX Option And Holds Hedged VIX Futures And Options Position; Stutland Is Long Australian Foreign Debt Held In Australian Dollars

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (TLT) Calls
Accounts Managed By Brian Kelly Capital Are Long Australian Dollars
Accounts Managed By Brian Kelly Capital Own (AGO)
Accounts Managed By Brian Kelly Capital Own (EBAY)
Accounts Managed By Brian Kelly Capital Own (MCP) Calls
Accounts Managed By Brian Kelly Capital Own (BHP)
Accounts Managed By Brian Kelly Capital Are Short Yen

For David Khani
FBR Capital Markets Has Recieved Investment Banking Compensation From (CNX), (MEE) In Past 12 Months
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (CNX), (MEE), (ACI), (BTU), (SLM), (ZINC), (ANR), (PCX), (CLD)
(NRP), (ACI) Is An Investment Banking Client Of FBR Capital Markets
FBR Capital Markets Has Acted As Placement Agent On Private Offering Of Arch Coal Securities
FBR Capital Markets Has Recieved Investment Banking Compensation From (ACI) In Past 12 Months

For Aswath Damodaran
***No Dislcosures

For Jennifer Davis
Lazard Freres & Co. LLC Has Recieved Investment Banking Compensation From (VRA) In Past 12 Months
Lazard Capital Markets LLC Has Managed Or Co-Managed Offering For (VRA) In Past 12 Months





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