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While competitor Hewlett-Packard reported better than expected earnings and
revenue in its quarterly announcement this week, the picture for Dell in the
year ahead is not nearly as bright.

In a preview of Dell’s earnings announcement slated for Thursday, financial
analyst firm Bernstein Research said it was lowering its revenue and earnings
estimates for the PC maker for its fiscal 2010, which ends in January 2010.

"We forecast -3 percent revenue growth for Dell in FY10 and essentially
flat earnings per share growth," writes Toni Sacconaghi Jr., senior
analyst at the firm and author of the report. "While we do expect Dell to
improve margins year over year, weaker revenue growth and a potentially more
difficult industry pricing environment are likely to limit the company’s
progress."

Factors that could affect the company’s performance are pricing pressures and
further deterioration of bad debt in Dell’s financing business. But Sacconaghi
remained positive about Dell’s prospects in the long term.

"We continue to believe that Dell has long-term potential to return to
operating margins of 8 percent and that the stock is attractive on this
basis," he writes. "Moreover, we believe that Dell’s fortunes are
largely in its own hands. That said, management has not executed to date, and
market headwinds are getting stronger, making the timing of Dell’s turnaround
increasingly uncertain."