Dell Falls 6% After Q4 Earnings

Dell Inc. DELL Released its Q4 earnings results on Tuesday after the closing bell. The company reported net income for the quarter of $764 million or $0.43 per share, versus $927 million or $0.48 per share, in the year ago period. On a non-GAAP basis, which is comparable to analysts' consensus, DELL reported net income of $913 million or $0.51 per share, compared to $1 billion or $0.53 per share, in last year's fourth quarter. This came in slightly below analysts' consensus EPS estimates of $0.52. Net revenue at the company was up 2% to $16.03 billion compared to $15.69 billion last year. This narrowly beat Wall Street consensus estimates of $15.96 billion. Looking ahead, DELL guided for a 7% decline in fiscal Q1 revenues, implying sales of $14.91 versus estimates of $15.18 billion. Despite an expected drop in revenues for the first quarter, the company said that fiscal 2013 non-GAAP earnings per share should exceed the $2.13 Dell reported in fiscal 2012, which was a record. Currently, Wall Street analysts expect the company to report EPS of $2.04 for fiscal 2013. On Wednesday, DELL shares have been under pressure in the wake of the report. Going into the close of trading, the stock had lost 6.10% to $17.09. Volume has been very heavy with around 44 million DELL shares trading hands versus a 3-month daily average of just over 17 million. If nothing else, DELL is an extremely cheap stock on an earnings basis. Noted value investor and hedge fund manager David Einhorn recently revealed that he had built a position in the name which he calculates is trading at 4X earnings when you back out the $7 per share in cash on its balance sheet. Disregarding the company's cash, DELL is trading at a trailing P/E of 8.80, a forward P/E of just 8.18 and a PEG ratio of 1.32. The median Wall Street price target for the name is $19.75 with a high target of $25.00.