Dell Q4 earnings preview: Will aggressive cost-cuts help?

Posted Feb 25th 2009 5:05PM by Brian White
Filed under: Earnings Reports, Dell (DELL)

Dell Inc. (NASDAQ: DELL) is set to report fourth quarter earnings tomorrow after the market closes, and the second largest PC maker is expected to report a 27-cent earnings per share on about $14.4 billion in sales. For the full fiscal year, Dell's expected numbers are for a $1.33 EPS and about $62 billion in revenue.

The last three months of sales in 2008 for the PC industry have been widely considered to have been the worst in about six years of reporting quarters. Indeed, larger competitor Hewlett-Packard Corp. (NYSE: HPQ) saw its most recent quarterly profits sink 10% while missing expected EPS by 18 cents. With all the success HP has had in the last 18 months, there is no escaping the recession even by the strongest companies in the PC industry.

While Dell's furloughs and cost-cutting moves in the last three months proved fruitful, Dell will have to keep the heat up, along with all the other PC makers, if it expects to ride a consumer and business spending slowdown and come out the same company once it's over with. With Dell's heavy reliance on hardware (and commodity hardware at that), the company has more of a chance of not hitting targets compared to more diverse competitors like HP. With DELL shares sitting just over $8 this afternoon, all it can do is continue cutting where it can and hope for the best.

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