NEW YORK (CNN/Money) - Can Dell's seemingly magical outperformance continue indefinitely? After the bell Thursday, Dell reported another solid quarter -- meeting earnings expectations and coming in ahead on revenues, impressive achievements in today's climate.

While Dell's competitors struggle with bloated cost structures and excess inventory, the famously lean and efficient Dell has increased shipments and gained market share -- while remaining solidly profitable. (For more on Dell's earnings, click here).

All that, of course, is why Dell's stock price has held up so well over the last year and a half as tech stocks in general have continued their discomfiting slide; indeed, Dell remains about where it was when the year began while the NASDAQ has slid more than 30 percent.

Still, Dell's earnings report didn't give the stock much of a pop; evidently the results weren't quite good enough to make investors forget the dismal state of the industry the company is in -- or the stock's already rich valuation. Dell now sports a forward PE (based on fiscal 2003 earnings) of 35, though analysts don't expect the PC industry to grow more than about 15 to 20 percent a year.

And that may be too optimistic. With few compelling reasons for consumers or businesses to upgrade computers more than powerful enough to handle most tasks sent their way, the PC replacement cycle is getting stretched further and further out. Some tech bulls foresee a dramatic "snapback" in business spending on tech in 2003, but then again we've been hearing about an imminent revival in tech spending pretty much nonstop since tech spending first sank into its slump.

To justify Dell's current valuation, you have to assume not only that Dell can keep taking market share from struggling rivals like Gateway and the new, not-necessarily-improved HP -- an assumption that's probably reasonable -- but also that Dell will be able to make significant inroads into new markets -- not only servers and storage but printers and handhelds as well.

Trouble is, Dell's seemingly magical "direct model" may not prove quite so magical outside the PC business. In the PC biz, as Dell has shown, keeping inventory low can mean the difference between a profitable PC business (like Dell's) and an unprofitable one. But that's because PC inventories are so poisonous; a PC on the shelf goes bad faster than an overripe banana, losing value with stunning speed the moment it comes off the assembly line.

Many observers seem to think that Dell can simply apply its fast and cheap formula to new businesses and reap a quick reward. While servers and storage are far less commoditized businesses than the PC business, they're similar enough to PCs for Dell's direct model to give it considerable cost advantages over rivals like, say, Sun, which has had trouble bringing its bloated cost structure into line with new realities. Dell may not have the expertise with high-end systems that Sun has, and its systems may not be able to do as much as Sun's, but cost-conscious businesses are finding that Dell's cheaper servers may offer far more bang for the buck.

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But it's an open question whether or not Dell's "direct model" translates into significant advantages in, say, the printer business. Michael Dell explicitly confirmed on Thursday's conference call that Dell does indeed intend to enter the printing business. But it may be harder to take advantage of Dell's direct model here than many observers seem to think.

For one thing, Dell will face stiff competition: HP may have trouble selling PCs profitably these days but it does seem to know how to make and sell printers. And Dell's inventory efficiencies may not make as much difference here; the real profit in the printing business, of course, comes from selling ink and toner cartridges, and ink, unlike computers, doesn't dramatically depreciate in value as it sits on a shelf.

As for PDAs, well, we'll see; a look at the stock price of Palm and Handspring suggests this business can be a minefield even for established players.

Dell is very good at what it does. That doesn't mean it will be similarly good at everything else it decides to do in the future.

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