Dell 4th-quarter results Thursday likely another sign of slow tech spending by businesses

more images

more images

Earnings Preview: Dell to report 4Q Thursday

SEATTLE — Dell Inc., the third-largest computer maker in the world behind Hewlett-Packard Co. and Acer Inc., reports its fiscal fourth-quarter results after the stock market closes Thursday.

WHAT TO WATCH FOR: Any sign that corporations started spending again on Dell hardware and services in the November-through-January period.

Reports from industry analysts and quarterly results from HP, Intel Corp. and others have already shown consumer spending on PCs came back from recession lows in the holiday quarter. But so far, big businesses have not returned to normal PC buying patterns, though some have begun upgrading their server computers.

Analysts will scrutinize Dell’s gross margin and operating expenses. The numbers will be tough to interpret at a glance because of Dell’s $3.9 billion acquisition of technology services provider Perot Systems Inc.

UBS analyst Maynard Um writes in a recent research note that Dell’s gross margin — how much of Dell’s product revenue stayed in its pockets — excluding Perot results may have taken a hit as component prices rose.

Um also writes that it is likely Dell’s expenses rose as some companies spent what was left of their 2009 technology budgets right before the end of the year.

WHY IT MATTERS: Dell’s business is more reliant than competitors on enterprise customers, but most big hardware and software companies are struggling to some degree while big companies pinch pennies. Most analysts expect enterprises to remain cautious about spending on new technology for at least several more months.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect Dell to earn 27 cents per share on $13.85 billion in revenue. That’s excluding contributions from Perot Systems.

LAST YEAR’S QUARTER: Dell reported net income of 18 cents per share on $13.4 billion in revenue.