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As UBS analyst Ben Reitzes noted, many investors are primarily focused on whether or not Dell has improved its product and profitability margins. But there are several other questions that Dell may or may not answer this week where the answers could have both long- and short-term implications for the company, if not its stock price. Here are five of them:
1. Does Dell provide an update into the myriad investigations going on into its accounting and financial reporting? The U.S. Securities and Exchange Commision, the Audit Committee of Dell's own board, and the U.S. Attorney for the Southern District of New York are all diving deep into Dell financial records going back at least four years. On this front, no news is probably good news for day traders and shareholders (Dell shares have only gone up since the company revealed that federal prosecutors from Foley Square are investigating its finances.) But no news is probably not such good news for the company itself as it means the drama and questions continue to drag on.
2. What's Dell's cash flow from operations? For the past three quarters, Dell's cash flow from operations has declined precipitously. Last quarter, Dell executives said they expected to borrow $1 billion to fund its operations, largely because most of its cash is in overseas markets and the company would lose a lot of it to taxes if it had to bring it back into the U.S. to pay for day-to-day business.
3. What is the contribution of Dell Financial Services to Dell's top line? The last time Dell filed a mandatory 10Q report with the SEC, it reported that revenue from DFS was $1.5 billion, more than 10 percent of the company's total sales for that quarter. As a result, DFS is, essentially, one of Dell's biggest customers. But while the market has been taking the time to try estimating how much improvement Dell has seen in average selling prices in the last quarter, it may be harder to figure out whether Dell has made any improvement in average leasing prices and conditions. DFS is an off-balance sheet entity that Dell runs in partnership with CIT Group (a Tyco spin-off.) Its profit-or-loss numbers are non-public information.
4. Do Dell's earnings per share suffer because the company has suspended its long-running share repurchase program? At the same time Dell announced its finances were under investigation, it also announced it was suspending its share repurchase program. Until then, the company had successfully bought back between 23 million and 47 million of its own shares each quarter for several quarters, essentially taking them off the market. The fewer outstanding shares of Dell stock in the market, the higher its earnings per share.
5. Does Dell report full earnings for the quarter, or "abbreviated earnings" that may be subject to restatement? If Dell reports a great or even good quarter, a restatement down the road could mean it was actually a mediocre or not-so-great quarter. Which is why the answer to question Number 1 could loom so large.