Dell Post-Mortem: Sales Going Down, But Hope for Profit Springs Eternal

Dell ( DELL ) hit a new 52-week low today, $8.72, before closing down 51 cents, or 5%, at$9.30, after last night reporting sales that missed estimates by a billion dollars and called the global IT demand outlook “challenging.” The stock was downgraded from “Outperform” to Market Perform” today by Friedman Billings . But at least a couple of analysts are willing to hold onto a “Buy” on the stock, impressed by the company’s ability to cut costs and boost margins last quarter: Citigroup’s Richard Gardner maintains his “Buy” rating while lowering his price target on the stock from $14 to $15, but actually raised his earnings per share estimate for $1.12 to $1.17, noting that Dell’s margins increased in the quarter and the company is in “margin preservation mode.” Gardner says negative cash flow of $86 million in the quarter is an indication of a collapse in demand, because it came from “a ... (link)