Finally! Dell Earnings Delivers.

I think this is the turning point for Dell. I'm glad I bought at $18. Now...$23!

Dell reported fiscal first quarter earnings of 38 cents a share and revenue of $16 billion vs. consensus expectations of 34 cents and $15.7 billion.

"We are executing on all points of our strategy to drive growth in every product category and in every part of the world," chairman and CEO Michael Dell said in a statement.

Dell attributed its better-than-expected results to "better-than-industry growth" in a variety of segments including: servers (up 21% y-o-y), storage revenue (15%), enhanced services (13%), and notebook unit growth (43%).

Dell said overall product shipments rose 22% in the quarter, while consumer unit growth was "more than two times the industry rate" as the company's global market share rose by 1.2 points to 8.8% percent.

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Lenny Dystra recommends Dell

Lenny Dystra likes Dell and so do I.

"Dell is a solid company. Dell may not be the sexiest pick, but the company has no debt and its return on equity (ROE) is off the charts. It has $8 billion in the bank and $4 billion in cash flow. Its forward price to earnings is an attractive 10.8."-Stock Article Link

Dell's stock drops $3.60 to $24.54 to mixed Q3 results! Over reaction?

No guidance and a 1% decline in Dell's desktop PC sales, turned investors away from the rest of the company's report, in which it earned $766 million, or 34 cents a share, a 27% rise over the $601 million, or 27 cents a share, Dell earned a year ago.

Highlights of the conference call.

"We did generate $15.6 billion in revenue, a 9% increase year over year, and that revenue growth was driven by a 9% increase in units. Operating income was up 13%, contributing to a 26% increase in EPS and perhaps most importantly to us, and I hope to you, is that we generated $1 billion in cash from operations, which drove our cash and investment balance up to $14.6 billion.

When we talk about creating value for our shareholder, cash generation for us is the ultimate litmus test...

"So with nearly 10,000 stores by year-end, we’ll soon be at about 27% of the top retail doors globally....

Today, 500,000 people go online every day for the first time in their lives and Asia accounts for 60% of the world’s population and a half-a-billion Internet users....

By 2011, the number of desktops sold in the BRICK countries will outnumber those sold in the U.S. by three-to-two.....

In both Brazil and India, we grew revenues at more than 40% and in Russia we grew over 70%. In Asia-Pacific and Japan, we achieved $2 billion in quarterly revenue for the first time in the second quarter and in China, we have a significant opportunity to grow our business there. We intend to have a presence across over 1,000 cities in China versus the roughly 45 cities that we have a presence in today....

Dell has a very strong cash generation model -- $15 billion of cash on the balance sheet today and of course, a very high level of debt capacity...."

Transcript

All's Not Well With Dell: Fool by Numbers

Hey, Mr. Market! Dell Deserves Better!

Dell goes retail with Wal-mart.

Dell, which called the move a "first step" into the retail market, will start selling the computers bundled with accessories for under $700 starting June 10. Dell computers will be available in about 3,500 Wal-Mart and Sam's Club stores in the United States, Canada and Puerto Rico.

Dell Goes Direct To Wal-Mart

Dell's New Model

Our stock pick DELL can yield 16% compounded long term

Our stock pick, Dell Computers (DELL), at $23.64, can yield you 16% compounded over the long term. I have greater confidence in DELL now that Micheal Dell, the founder, is taking over the position as CEO. There are a lot of naysayers out there but if anybody can turn around the company, it's Micheal Dell (bio).

Current earnings per share are $1.28 but year end estimates are $1.17. If you compound it by it's 5 year growth rate, 12% (analyst predict 12-15%) multiplied by a conservative future p/e of 24 = $49.49.

That's a compounded rate of return of 16% over 5 years.

Read this article about how founders usually outperform the market.

Motivated to buy more Dell after Peter Lynch reading

After reading some pages out of Peter Lynch's book, "One up on Wallstreet"....I was compelled to add to my positon to Dell today at $24.21. Why you ask?

When you look at financials, part of the bullish signs are:

-Cash is increasing
-Debt is decreasing (sign of prosperity)
-Shares are decreasing
-Increasing cashflow

Let's look at Dell's financials

-Cash position 2004: $4.3 billion, 2005: $4.7 billion, 2006: $7 billion, current: $8 billion.
(More money means they can buy back more stock to drive it up higher or reduce debt)

-Debt has more or less stayed around $500 million since 1999
(You'd think they would have more debt now since they have twice the revenue compared to 1999. 25 billion vs 57 billion)

-Common equity 2004: 6.2 billion, 2005: 6.4 billion, 2006: 4.1 billion
(Amazing! they've bought back more shares and still have $8 billion in cash!)

-Cash flow 2004: 2.9 billion, 2005: 3.3 billion, 2006: 3.9 billion



In simple terms, if your income allowed you to pay down more debt, increase your cash position and have a higher positive cash flow every month, I'd say your financial future looks bright. That's how I fell about Dell over the long term.

Michael Dell buys $70 million of Dell Stock

Maybe it's good for public relations or maybe there really is value there at a price he bought at 23.99.

Value pick - Dell

Dell has been an underperformer due to 2 factors, HP taking market share and the PC demand has slowed. However I do recommend building a position in it under $24. According to the S & P report which I get at TD Waterhouse, for the past 10 years, growth has been 23%. According to Yahoo! Finance, Analyst are predicting 18% growth for the next 5 years. I like to have a margin of safety, so by using 15% growth multiplied by it's current EPS 1.39. Future EPS in 5 years will be 2.80. If you take that number 2.80 multiply it by it's future P/E of 20 (my prediction) = $56 in stock price. That's a compounded rate of return of 19%. The return will be greatly altered depending on my prediction on future growth rate and future p/e. The company has a great balance sheet, it's worst year for Return on Equity was 24%, usually it exceeds 40% plus. That's amazing! And being a direct to consumer busines model, it only has 4 days inventory. It's also continues to buy back stock at an average price of $30 and still is prepared to buy 123 million more shares. It was the #1 ROI in the 1990s and I still think it is a good buy going forward in the next 5 yrs. I just bought some today at $23.65