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Merrill analyst says Dell might miss 4Q estimates

Dell Computer Corp. (Nasdaq: DELL) shares moved up 1 11/16 to 44 13/16 Friday even though a Merrill Lynch analyst suggested the PC maker might miss analysts' estimates in its fourth quarter.

Analyst Steve Fortuna said higher component costs might have eroded profit margins in the quarter.

First Call consensus expects Dell to earn 21 cents a share in the quarter.

Fortuna is expecting a profit of 20 cents a share on sales of around $7.1 billion.

"The fact that Dell has not yet pre-announced to us does not suggest that the quarter is any safer than it was before," Fortuna said in a research note. "Dell continues to face an execution challenge in the fourth quarter due to generally higher component costs across the board."

Last quarter, Dell issued a profit warning before meeting analysts' reduced estimates and predicting a strong fourth quarter.

If Dell was to preannounce an earnings shortfall this time around, Fortuna speculated that the announcement would come in the third or the fourth week of January and not in the days preceding the February 10 earnings release.

Dell shares moved up to a 52-week high of 55 in February before slipping to a low of 31 3/8 in June.

Thirty-one of the 36 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.