Dell’s earnings were 51 cents and missed the consensus of analysts by a penny; the company also said that revenue would decline by 7 percent in the current quarter. In a note to clients today, Shaw Wu of Sterne Agee dropped his rating to “underperform,” the equivalent of a “sell,” arguing that Dell’s PC business continues to suffer at the competitive hands of Apple, Acer and rejuvenated Hewlett-Packard. “We are concerned with the company’s longer-term fundamental position and may face more difficulty making further operational improvements,” Wu wrote.

Richard Kugele, of Needham and Co. in New York, downgraded Dell to a “hold” from a “buy.” Rich Gardner of Citigroup also cut his rating to “hold” and dropped his target price to $19 from $20, citing declining prospects for improvements to Dell’s gross margin in the current quarter.

But the chorus of analysts wasn’t all negative. Chris Whitmore of Deutsche Bank, who last week suggested that, all things considered, Dell’s results might turn out “pretty good,” saw it differently. He blamed the ongoing shortage of hard drives brought on by last year’s flooding in Thailand and weak public sector buying, and still finds Dell attractive. The shortage, he says, was the primary reason that Dell’s gross margins — which came in at 21.7 percent — missed estimates. “Gross margins were light due to negative hard drive impact — shortages hampered the ability to sell richer high-end systems — and soft public sector results,” Whitmore wrote in a note to clients today. He maintained his “buy” rating.

Brian Marshall of ISI maintained his “neutral” rating. He wrote in a note today that Dell’s plan of shifting its revenue base away from consumer and business PCs and toward higher-value enterprise IT, software and services is going to take years. “We believe changing the composition of a $60 billion revenue base is non-trivial and takes years not quarters to successfully navigate. [We're] still scratching our heads on how earnings per share grows in 2012. … In the face of flat revenues, declining gross margins and continued operational expense growth, we struggle on how EPS will be up in 2012. We like the plan, just not the set-up.”

(Michael Dell photo by Asa Mathat)

Richard Gardner of Citigroup is in the bullish camp. In a note to clients today, he said that HP shares “remain significantly undervalued” and reiterated a $65 price target. HP, he wrote, has an “under-appreciated set of assets” that should help deliver strong earnings growth over the next five years, observing that it trades at a 35 percent price-to-earnings discount versus IBM, and a 30 percent P/E discount when compared to Cisco Systems.

Chris Whitmore of Deutsche Bank was much more muted. In a research note to clients issued today, he said that HP is fairly valued based on the risks associated with execution on the strategy combined with an anticipated increase in spending, while revenue from such businesses as PCs and printers is growing more slowly. Nor was he impressed by CFO Cathie Lesjack’s announcement that HP will boost its quarterly dividend, and that it expects to increase its per-share earnings by $7 between now and 2014. “In aggregate, we believe the long term EPS target and the dividend increase suggests no large transformative acquisitions in the near-term.” Finally, he doesn’t seem to expect much from HP’s plans for webOS, the mobile operating system it acquired with Palm last year. “While we believe the webOS offering has potential, it is late to market (Android and iOS have 12-18 month lead) and HP risks alienating Microsoft which is a key partner. Finally, HP has yet to ship a Touchpad into a market that is showing enormous demand for the recently refreshed iPad 2.” Apple has, he said, “an insurmountable lead” in the market for tablets and smartphones. He rates HP stock a “hold” with a price target of $42.

Robert Cihra of Caris and Company said he found Apotheker’s comments to be “relatively familiar.” Talking about leveraging scale to approach the cloud computing business, as Apotheker did yesterday, is “similar to those same strategic opportunities being targeted by virtually every HPQ competitor.” He conceded that, while consumer technology is leaving an indelible mark on corporate IT–that trend often described as “the consumerization of IT”–HP is in a unique position, given its reach in both areas. He’s just not convinced that HP knows what to do to take advantage of that position.

“HP stock certainly looks cheap if it can achieve targeted numbers, but we see it getting tougher for the company to navigate its massive IT superstore (after all this is HP + Compaq + EDS) while also keeping pace with competitors we consider more innovative and defensible, including Apple, EMC and IBM.”

PREVIOUSLY:

• Apotheker Sets Hewlett-Packard on a Cloud-Centric Path
• Léo Apotheker: Hewlett-Packard Will Build a Cloud
• HP’s New CEO Has a Big Day Planned, and a Bigger Job Ahead
• Another Advisory Firm Singles Out HP Director Babbio
• Shareholder Group Contends HP’s New Board Is Too Chummy
• “Peripatetic Polyglot” Léo Apotheker Wants to Save HP’s Soul by Buying Software Companies
• HP Earnings Today: Will Léo Apotheker Speak?
• Michael Dell Thinks HP Paid “Way Too Much” for 3Par
• Judge: HP Can Re-Investigate Hurd Departure
• Is This the HP Board That Will Allow Us to Stop Thinking About HP’s Board?
• Meg Whitman, Patricia Russo Among Five Joining HP Board
• HP Plans Another Probe Into Hurd Departure
• Léo Makes It Official: SAP’s Bill Wohl Joins Hewlett-Packard
• Want Enterprise Growth, HP? Think Services
• Mark Hurd Really Wants to Keep the Jodie Fisher Letter Private
• Mark Hurd Doesn’t Want You to Read the Letter That Cost Him His Job
• HP Networking Head: “People Are Tired of Paying for Cisco”
• HP Names Ex-SAP Chief Apotheker as CEO

Though the clamor over a design issue that can diminish the iPhone 4’s signal strength might drag on the company’s shares, as it is today, Apple (AAPL) probably isn’t going to issue a product recall.

Said Piper Jaffray analyst Gene Munster, “We see [a recall] as a highly unlikely scenario given the issue is completely resolved with a case, which is a significantly less expensive solution for the company.”

Citigroup analyst Richard Gardner agreed.

“We consider the probability of a recall to be very low given our view that the issue in question is not serious enough to warrant a recall,” he said in a note to clients today. “While bridging two portions of the antenna with one’s hand on the lower-left corner of the phone does cause signal degradation, it does not typically result in dropped calls unless the signal from the cell tower is already weak. Excluding this issue, overall signal reception on iPhone 4 seems at least as good, if not slightly better, than reception on the iPhone 3GS.”

Over at Barclays Capital, Ben Reitzes offered a similar take. “As users, we have experienced some issues w/call drops; however, we have found drops go away after attaching a bumper accessory, which is quite useful anyway,” he wrote. “To date, we have not seen any overwhelming evidence of iPhone 4 units being returned.” And if the current spate of negative headlines should change that, well, it’s probably not going to have much of an effect on the company’s bottom line anyway.

Said Reitzes, “Worst case is some near-term sales are impacted and/or Apple revises its policy on ‘not giving away’ free bumpers, but usually demand just gets pushed to a slightly later date. Therefore, we do not believe these issues will impact Apple’s product momentum or the story materially at this time.”

To Reitzes, the iPhone 4 antenna issue is “overblown,” a sentiment shared by Munster as well.

“Ultimately we believe this PR black eye takes away some near-term upside potential to our iPhone estimates, but it does not change the long-term trajectory of the iPhone. While the issue has gained significant traction in the press, the reality is that we estimate this problem periodically affects 25 percent of iPhone 4 users given the fix is easy (a case for the iPhone), and 75 percent of customers choose to use a case anyway. While it has reached a boiling point, we believe the magnitude of this issue is being overblown.”

And seriously, an iPhone 4 recall? Steve Jobs would rather recall hiring John Sculley.

[Image credit: Rick Smolan]

Gardner’s revised outlook is for profit of $5.29 on sales of $32.68 billion the fiscal year ending this month, and profit of $5.43 on sales of $35.2 billion next fiscal year.

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“Field checks confirm that shipments of new MacBooks have begun, with a sharp production ramp planned for September and an introduction planned for early October,” Gardner wrote. “The most distinctive features of the new MacBook appear to be a very thin aluminum casing, an LED-backlit display and an aggressive entry-level price point.”

Gardner expects Apple (AAPL) to introduce its fall notebook line “within weeks.” October 14, perhaps?

And that was confirmation enough for analysts. Citigroup’s (C) Richard Gardner promptly issued a research note pitching June 9, the kickoff of the company’s annual Worldwide Developers Conference, as the likely date of the 3G iPhones’ debut. Wrote Gardner, “We expect a steady stream of new products beginning on 9 June with a 3G iPhone and iPhone/iPod touch SDK, continuing with a refresh of the complete laptop line in July/August and concluding with a complete refresh of the iPod line in August/September.”

June 9 seems a plausible, if not bleedingly obvious launch date. Announce the 3G iPhone at WWDC, with an eye toward an official release on June 29, the first anniversary of its predecessor’s debut? That gives Apple plenty of time to reach its goal of shipping 10 million iPhones by the end of 2008. The company has so far sold 1.7 million iPhones worldwide, leaving 8.3 million more to go if it wants to hit the 10 million mark. Uncrating the 3G version of the device in early summer, perhaps in concert with a move into the massive Japanese and Chinese markets, would make reaching 10 million iPhones shipped an easy matter.