DELL’s Stellar Quarter


In Tuesday morning’s WSJ, ace technology reporter Dan Gallagher wrote an article on Dell (DELL) that caught my attention (“Dell Might Be Tech’s Cheap Dark Horse” [SUBSCRIPTION REQUIRED], May 24). What struck my fancy was that DELL was trading at less than 6x forward earnings according to Gallagher. With my belief that conditions were in play for a relief rally I was looking to pick up stocks to play a potential move higher and DELL struck me as a perfect vehicle – especially given the catalyst of earnings Thursday afternoon.

Happily DELL did not disappoint. Revenue of $26.1 billion was +16% from a year ago and and handily beat analyst’s estimates as did EPS of $1.84 (+36%). I was also ecstatic to see that DELL used the recent selloff in its shares to buy back $1779 million worth of them, reducing its diluted share count by almost 4% to 780 million from 810 million. DELL also recently initiated a 33 cent quarterly dividend which works out to almost 3% annually. Even with DELL shares currently +5% in the after hours to $46 it represents tremendous value.

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