Dell's shockingly good results

Posted Jun 4th 2007 3:00PM by Eric Buscemi
Filed under: Dell (DELL), Motorola (MOT), Bargain Stocks

Dell Inc (NASDAQ: DELL), the Texas-based computer manufacturer, shocked Wall Street last night with a massive 240 basis point expansion of gross margins. The stock was up as much as $2 in after-hours trading.

What was the response by sell-side analysts? Disbelieve. Merrill Lynch said sell into strength while Cowen & Co maintained its Neutral rating on the stock. However, Bernstein Research, a research firm known for sticking its neck out, had and continues to have, an Outperform rating on the stock.

Dell grew revenue year-over-year by 3%, besting estimates expecting little if any growth. Higher average selling prices and lower component costs helped results.

Dell's quick turnaround seems somewhat similar to what happened over at Motorola Inc (NYSE: MOT). Dell's new head of global consumer products, Ronald Garriques, worked closely with Ed Zander to help Motorola's quick turnaround. Maybe he is doing the same at Dell. Stay with the stock for a nice ride. When Dell's model is on track, it can generate a lot of cash.

Tags: computers, Cowen, Dell, Dell Inc, DellInc, Merrill Lynch, MerrillLynch, MOT, Motorola, rating, revenue