Can Dell Deliver?

Shares of Dell (NASDAQ: DELL) have gained more than 16% this month, as investors have been betting on a strong quarter for the company, which reports earnings tomorrow night.

Now can Dell deliver?

Analysts are looking for a 7.1% increase in April quarter sales to $15.66 billion and earnings of 33 cents a share, according to Thomson Financial. Investors have been betting that the company’s lack of a negative pre-announcement means it will meet or exceed those numbers.

Morgan Stanley recently upgraded the company on its prospects in the low-end server market and expectations for a strong quarter. The biggest issue will likely be the same question that has plagued other hardware makers this year: how soft is the U.S. market?

Dell has been focused on cutting costs and improving operations, including a return to retail sales. Investors have also speculated that HP (NYSE: HPQ) could become distracted by its proposed acquisition of EDS (NYSE: EDS), giving Dell room to regain ground in PC sales.

Dell climbed 20 cents to close at $21.69 on Wednesday. In the last year, it has traded between $18.13 and $30.77.

The broader market rose Wednesday on better than expected durable orders, as traders shook off a rebound in oil prices and renewed concerns about the financial sector.

Yahoo (NASDAQ: YHOO) gained more than 2% after Microsoft (NASDAQ: MSFT) continued to express interest in the company and Yahoo CEO Jerry Yang said he remains open to talks between the two.

Expedia (NASDAQ: EXPE) was another stock rising on takeover speculation, up 4.7% even though the company dismissed the rumors.

The Nasdaq rose 5 to 2486, the S&P added 5 to 1390, and the Dow rose 45 to 12,594. Volume rose to 3.93 billion shares on the NYSE, and 1.85 billion on the Nasdaq. Advancers led by a 19-14 margin on the NYSE, and 15-14 on the Nasdaq. Upside volume was 59% on the NYSE, and 57% on the Nasdaq. New highs-new lows were 48-92 on the NYSE, and 64-103 on the Nasdaq.