I think the biggest mistake many investors make is to be rigid and not admit a mistake when one is made. There is not a person in the world that hasn’t made many errors and bad calls while investing, including the venerable Warren Buffett. I am still deciding whether my bearish article on Dell (DELL) back in September was a mistake or not. I think it is worth another look and to see if anything has changed since then.
Great Quarter
The company reported 53 cents per share versus the consensus of 37 cents for the quarter ended January 2011. That kind of beat is unusual for Dell, who is usually within a penny or two of analyst projections. An amazing 31 analysts have raised their estimates going forward for the company, which is now expected to earn $1.69 per share, up from $1.49 before the report.
It seems the company’s Enterprise Solutions and Services Business is finding its stride, which contributed to the quarter’s strength. These units have the capacity to make serious inroads into the exploding tablet market, which could be the next big growth driver for the company. Corporations will be making mass purchases of tablets to give to their employees, which will help Dell a lot.
Here is what I wrote previously:
“The stock isn’t expensive based on current-year estimates. It is trading at 9.3x this year’s estimates of $1.29. Normally, I would consider the shares cheap, but I don’t see many upside catalysts at the moment. I wouldn’t recommend shorting it at these levels, but there are much better places to put your money now.â€
I would now concede that this statement is not totally accurate anymore. Its latest quarter shows that management has regained control of the company and that there are catalysts on the horizon, such as the tablet market. I made the point that the stock wasn’t expensive, implying any improvement in business conditions could move the stock in a hurry. It has already increased over 20% from those levels, but it will take another couple of quarters for the stock to move meaningfully higher. The difference now as opposed to then is that I think that just might happen.
Was I Wrong About This Stock? is an article from: 
