Dell Inc. (NASDAQ: DELL) has just what appear to be solid earnings in its report, but the individual metrics are acting as a drag.  The non-GAAP report was up 69% to $0.54 EPS and revenue rose 1% to $15.66 billion.  Thomson Reuters had estimates of $0.49 EPS and $15.76 billion in revenues.  Dell also said that its cash flow from operations hit a record $2.4 billion and it ended the quarter with $16.2 billion in cash and investments.  Gross margin was 22.5% and adjusted gross margin was 23.2%.

The company is also raising estimates on non-GAAP operating margins despite seeing flat revenue. Dell sees its next quarter revenues roughly flat relative to the second quarter’s $15.66 billion.  Next quarter estimates from Thomson Reuters are $0.45 EPS and $16.22 billion in revenues.  The company sees its annual non-Gaap operating income growth expectation to 17% to 23% (from 12% to 18%) but it lowered its annual revenue growth to 1% to 5% versus a prior range of 5% to 9% and compared to about $61.5 billion in the last year.  Dell further noted that it expects to close on the Force10 Networks buyout in the coming quarter.

Some individual statistics in revenue segments for the quarter are as follows:

• China Up 20%
• India Up 21%
• Growth Market total revenues up 14%
• Small to Mid-Sized Business at $3.7B
• Public sales $4.5B
• Large Enterprise at $4.6B

Other segment statistics for the quarter in sales are as follows:

• Storage $983M
• Enterprise Solutions and Services at $4.6B
• Desktop PC at $3.74B
• Services at $2.04B
• Mobility at $4.76B
• Software & Peripherals at $5.14B
• Servers/Networking at $4.03B

Dell is actually selling off by more than what many might have expected considering the tape.  Shares closed up 1.9% at $15.80 and the stock in the after-hours is down about 6% at $14.87.  The 52-week trading range is $11.34 to $17.60.

For the current market, these numbers actually seemed OK when you consider the current trends working against Dell and other non-Apple players.  If you have just seen the market and economic data of the last few weeks, how could the expectations have really been much higher than the estimates for the quarter ahead.  The stock may trade even lower before it is all said and done, but the takeaway could have just as easily been that Dell is holding up far better than many would have expected.  It also trades at about 8-times earnings.

JON C. OGG

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