) to buy from hold.
Analyst Richard Gardner says execution issues at HP within the Intel server and storage divisions have been positive for Dell during the second quarter, and boosts his confidence in results within these areas.
Over the coming year, he expects a return to oversupply within most component markets to widen Dell's PC and server cost, price advantage by 5% to 7%, vs. competitors who sell mostly via indirect channels.
Moreover, Gardner noted HP's ability to respond is limited by its fact that its PC and Intel server divisions are already close to operating breakeven. He sees $1.26 fiscal 2005 (Jan) earnings per share and $1.52 fiscal 2006.