Dell slips to No. 3 after HP, Acer in global PC shipments in 3Q, businesses still not spending

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Earnings Preview: Dell slips even as PCs rebound

SEATTLE — Computer maker Dell Inc. is scheduled to report its fiscal third-quarter results after the market closes Thursday. The following is a summary of key developments and analyst opinion about the period.

OVERVIEW: Research groups IDC and Gartner Inc. said PC shipments in July through September edged up after six months of decline.

But Round Rock, Texas-based Dell slipped in the researchers’ rankings, ending the quarter as the world’s third-largest PC maker by shipments. Hewlett-Packard Co. remained No. 1, and Taiwan’s Acer Inc. moved into the No. 2 spot, helped by its prominence in retail stores and its early jump on the netbook category.

In September, Dell agreed to buy technology services company Perot Systems Corp. for about $3.9 billion, a move that will help it expand beyond the core PC business and compete better with HP, which bulked up its own services business with a $13.9 billion takeover of Electronic Data Systems Corp.

The acquisition will bring Dell more than 1,000 customers in a wide range of sectors, from government to manufacturing and financial services. About 48 percent of Perot Systems’ revenue comes from the health care industry and 25 percent from government.

HP hasn’t yet reported earnings for the three months that ended in October, but released preliminary results last week that were better than Wall Street was expecting and upped its guidance for 2010.

Also during the quarter, Dell agreed to pay $4 million to settle a lawsuit in New York state over deceptive advertising of promotional credit financing and warranties. Dell acknowledged no wrongdoing in the settlement.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect Dell to post a profit of 28 cents per share on $13.1 billion in revenue.

ANALYST TAKE: Broadpoint AmTech analyst Dinesh Moorjani wrote in a research note last week that Dell’s PC shipment growth lagged the overall industry in the quarter because its business customers haven’t resumed spending on technology yet. The company also resisted cutting prices just to gain market share.

The analyst also wrote that he expects Dell’s margins to have declined in the quarter thanks to higher component prices.

But Moorjani raised his earnings estimates for Dell’s next fiscal year in part due to “increased conviction of an enterprise (information technology) spending recovery and PC upgrade cycle in 2010.”

WHAT’S AHEAD: Dell’s next quarterly report, due in February, will include the first peek at how Dell’s entry into the smart phone industry performed. The company unveiled phone hardware and announced its first two carriers, China Mobile in China and Claro in Brazil, last week.

STOCK PERFORMANCE: Shares of Dell gained 8 percent to end the quarter at $14.45 on Oct. 30. Since then, the stock has improved another 10 percent.