Dell, Inc. (DELL)

Dell, Inc. (DELL) reported discouraging 1Q10 results with revenue and EPS falling below our estimates, and significant declines from the year-ago quarter. The rapid decline in corporate profits, highly illiquid capital markets and the recessionary outlook are likely to dampen corporate capital spending. This is likely to have a major impact on Dell's server business.

Adding to this is the continued decline in consumer spending as shown by the decrease in sales of PCs and cell phones over recent months. The company's marketing model of being the lowest priced supplier to the consumer in a declining market is likely to reduce margins over the coming quarters.

Although Dell is cutting costs, introducing new products and financing customers, given the uncertainty of the length of the current world-wide recession, we believe Dell will continue to struggle, posting inconsistent results in future quarters. We maintain our SELL rating with a new six-month target price of $8.00.

Dell, Inc. (DELL) : FULL ANALYST REPORT

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