[T]he world’s second-biggest maker of personal computers, reported a 90 percent gain in fourth-quarter profit after increasing its market share and boosting smartphone sales.

Net income climbed to $126.9 million in the three months ended March, from $66.8 million a year earlier, Lenovo said in a statement today. That beat the $108.1 million average of eight analysts’ estimates compiled by Bloomberg.

Lenovo is developing mobile devices such as smartphones and tablets as it seeks to lure customers from Apple Inc. and Samsung Electronics Co. and weather a global slump in demand for PCs. The company maintained PC sales and expanded market share in the quarter, even as global shipments dropped 13.9 percent, researcher International Data Corp. reported in April.

New features include a voice control guide, enabling Skype video calls while watching television, snap mode to move in between multiple programs at once with Explorer running side by side. This will allow you to switch to games and music instantly, or to movies.

As far as how the video game functionality is changing, that comes with a new video game hand controller that was said to be designed by gamers for gamers and a new Kinect feature with advanced camera and reading functions. The company’s SmartGlass aims to tie in other hardware devices, enabling your tablet to be a remote control.

What is obvious is that this new Xbox One from Microsoft is aimed at being the first true convergence device from the company at the launch. The Xbox 360 was added to and grown on multiple times. Even if that ends up being the case here for Xbox One, this at least looks like Microsoft’s convergence device has arrived.

More details will be available after the 11:00 AM Pacific Time.

At least those seem to be the likeliest conclusions to be drawn from the brief letter that Dell’s board sent to Icahn and Southeastern Asset Management this morning. Here’s the money quote:

Unless the Board of Directors of Dell determines that your proposal could reasonably be expected to result in a “Superior Proposal” as defined in the Company’s existing merger agreement with affiliates of Silver Lake and Michael Dell, we are not permitted to provide you with information or engage in discussions concerning your proposal.

That sounds pretty much like a “put up or shut up” challenge. On May 10, Icahn and Southeastern suggested an alternative to Dell/Silver Lake’s $24.4 billion buyout that would have paid Dell shareholders $12 a share in cash or awarded shareholders $12 a share in additional stock and allow shareholders to keep their stakes in Dell, which would remain a publicly traded company. Dell’s board asked for more information on May 13, and today’s letter repeats that request.

Dell’s stock has wobbled between about $13.50 and $14.50 a share for the past three months. The shares closed at $13.40 on Friday and have been inactive this morning. The 52-week range is $8.69 to $15.29.

Of the two companies, the turnaround of J.C. Penney seems least likely. After 2012, when same-store sales fell more than 20%, first-quarter results showed revenue another 17% drop to $2.6 billion. J.C. Penney has two ingredients to help it recover.

The first is a five-year $1.75 billion senior secured term loan facility from Goldman Sachs Group Inc. (NYSE: GS), which buys the retailer time. The other is a promise from new (and old) CEO Myron E. (Mike) Ullman III to largely return J.C. Penney to the merchandising and operating strategy it had before disgraced CEO Ron Johnson took over the company and nearly ruined it.

Ullman said:

We are intensely focused on renewing customer excitement and loyalty through a combination of new attractions and long-beloved brands, with a promotional cadence that customers can appreciate and count on.

“Old” is the operative word. Under Ullman, J.C. Penney did not do terribly well, but it did hold its own. In 2010 and 2011, revenue was flat at about $17.5 billion. And the company made money each year. Ullman’s bet is that people who shopped at J.C. Penney once will do so again. He can revive some of the familiarity of the brand and, in doing so, bring back some portion of the old customer base. J.C. Penney’s revenue may not recover entirely to $17.5 billion, but, with judicious cost cuts, it could be profitable.

Dell’s problem is very simple. Consumers do not want to own PCs at all. However, that wisdom is flawed. Global PC sales fell 14% in the first quarter of 2013. However, experts blamed some of that on the weak launch of Microsoft Corp.’s (NASDAQ: MSFT) Windows 8. Despite these problems, Dell’s revenue dropped only 2% to $14.1 billion in the most recent quarter. And it made an extremely modest profit of $130 million. As a bonus, Dell’s non-PC businesses did extremely well. Enterprise Solutions, Services and Software revenue increased 12%.

There is a reason Michael Dell and Carl Icahn continue to battle for the company. Its PC operations have neared a bottom. Its non-PC businesses are thriving.

Investors see a financial future in Dell, even if it is because of the buyout. Its shares are 33% higher this year. J.C. Penney’s shares are off 5% over the same period, which is modest measured against its trouble. Since Ullman took over, the stock is 28% higher.

The market has called a recovery for both companies. From time to time, the market is right.

On a GAAP basis, the company reported quarterly diluted EPS of $0.07, compared with EPS of $0.36 in the year-ago quarter.

Operating income fell 73% and net income fell 79%. That’s Dell’s story for the first quarter. The company had to cut prices in order to sell products in a highly competitive and shrinking PC marketplace. That pushed revenues higher than expected, but margins fell to below 2% on a GAAP basis.

The company’s CFO said:

[W]e have taken actions to improve our competitive position in key areas of the business, especially in end-user computing, and it has affected profitability. We’ll also continue to make important investments to support our strategy and drive long-term profitability.

Dell did not provide an outlook for the second quarter, citing its definitive merger agreement to take the company private. The consensus analysts’ estimates for the second quarter call for EPS of $0.38 on revenues of $13.94. That EPS estimate is sure to be lowered following today’s report.

As we said in our preview of Dell’s earnings, whatever the company reported would likely have little impact on investors’ reaction. Only a huge upside report would have moved the stock much. The weak earnings report makes the standing offer from Michael Dell and Silver Lake Partners look pretty good right now. Perhaps we’ll get more details on the conference call later this afternoon.

Shares are trading flat in after-hours trading today after closing at $13.43 in a 52-week range of $8.69 to $15.31. Thomson Reuters had a consensus analyst price target of around $14.20 before today’s report.

Thomson Reuters has a consensus estimate for earnings per share (EPS) of $0.35 on sales of $13.52 billion. Both numbers are well below results from the same period a year ago.

The date change for the company’s results is generating more interest than the actual numbers. Few observers expect Dell to meet the EPS target due to price cuts the company made to overcome the slow sales in the PC business during the first quarter.

The other issue, of course, is the buyout offer from founder and CEO Michael Dell and Silver Lake Partners worth $13.65 a share ($24.4 billion) that has been challenged by activist investor Carl Icahn and Dell shareholder Southeastern Asset Management. The move to an earlier date may mean that Dell’s board has decided to accept one or the other proposal. If it does announce a decision, that will have far more impact on the stock’s price movement than the reported numbers.

If the board punts on the decision, the shares may not react much at all to the report unless the numbers are so bad that investors fear that the Icahn/Southeastern buyout offer will be withdrawn. Dell and Silver Lake would benefit from some crappy numbers — it makes their offer look less undervalued than Icahn/Southeastern claim.

Should the numbers be awful, Dell and Silver Lake, who believed the company was worth $13.65 a share yesterday, can assure shareholders that the company will be worth $13.65 a share tomorrow, just like they said all along.

Dell’s shares are trading at $13.42 in the mid-afternoon today, down 0.2% in a 52-week range of $8.69 to $15.31.

Pegatron has won contracts from Apple to build the iPhone 4S and the iPad mini. A report in the Financial Times this morning notes that Pegatron is seeking to increase its current workforce of 100,000 by 40%, still a far cry from Foxconn’s million or so workers.

The split between Apple and Foxconn apparently has less to do with the deaths and attempted suicides at Foxconn’s mainland China plants in 2010 than it does with cost. According to the FT, Foxconn tried to pass on to Apple wage increases for its Chinese workers and some factory relocation costs. Apple did not bite.

Foxconn has tried to diversify, but its success at doing so has been spotty. Apple has said that it would open at least one U.S. manufacturing in 2013. Foxconn employs about 3,000 U.S. workers at plants in Texas and California, and a natural assumption would be that Foxconn would get the additional work from Apple. That is not such an obvious conclusion now.

Last week Apple launched a real-time counter as downloads from the App Store homed in on a staggering total of 50 billion apps. The company has promised a $10,000 gift card to the lucky devil who downloads the milestone app and $500 gift cards to the next 50 people who download an app.

The App Store contains more than 850,000 downloadable apps, and those apps are available in 155 countries. Apple said last month that it has paid developers more than $9 billion in royalties.

For comparison, Google Inc. (NASDAQ: GOOG) said last September that users had downloaded more than 25 billion apps for Android-based devices. According to research firm Canalys, Google Play leads in the number of apps downloaded, with 51% of the total.

Apple, however, leads in revenue generation, accounting for 74% of all revenue, including the download stores at Microsoft Corp. (NASDAQ: MSFT) and BlackBerry (NASDAQ: BBRY). It is important for Apple to promote its lead because the larger a platform’s interface the more likely it is to get even larger. The network effect is, indeed, a powerful thing.

Bloomberg explains the Icahn counter offer:

Icahn and Southeastern Asset Management Inc., which together own 13 percent of Dell, are offering an alternative to the $13.65-a-share bid by Michael Dell and Silver Lake.

Southeastern and Icahn, in the sharply worded letter, said their proposal gives investors a chance to benefit from potential future growth at Dell and that it is more valuable than the buyout proposal. The two investors plan to take additional stock in the third-largest computer maker, rather than cash, they said.

The value of Icahn’s offer assumes that he can locate new senior management that can do what the other largest PC companies in the world have been unable to do. These companies include, at least, Hewlett-Packard Co. (NYSE: HPQ), Lenovo, Acer and Asus. Sales of PCs have started to fall due to the popularity of smartphones and tablets. And as the market disintegrates, Dell has fared worse than most. Research firm Gartner reported on global PC shipments:

Worldwide PC shipments totaled 79.2 million units in the first quarter of 2013, a 11.2 percent decline from the first quarter of 2012, according to preliminary results by Gartner, Inc. Global PC shipments went below 80 million units for the first time since the second quarter of 2009. All regions showed a decrease in shipments, with the EMEA region experiencing the steepest decline.

Gartner further reported:

Dell … had a challenging quarter, registering a shipment decline in all regions except Japan. In Gartner’s preliminary view, Dell’s shipment growth in Japan was boosted by moderate demand, driven by a corporate refresh. Dell’s discussions about a possible leveraged buyout impacted shipments, as competitors aggressively attacked Dell’s position in the professional market.

There is no silver lining in the cloud over Dell’s future.

A number of analysts claim that Dell is worth much more than the $13.65 Michael Dell has offered. To support that assumption, one of two things, and probably both, would need to happen. Dell’s operating costs would have to be pared to the bone, though Dell already has cut thousands of people. Dell also would have to enter sectors in which it has little or no market share, or has had the most limited success.

Dell has tried to move into enterprise computing, which would put it head to head with firms that include International Business Machines Corp. (NYSE: IBM) and Oracle Corp. (NASDAQ: ORCL). These companies control the high ground. Dell likely would need a significant position in both smartphones and laptops as well. Each of these sectors is already crowded, and each has powerful market leaders, such as Apple (NASDAQ: AAPL) and Samsung.

Dell’s future does not offer investors much, which makes the Michael Dell offer attractive, even if it appears low right now.

A report at TechCrunch now says that Microsoft is considering buying out B&N and other investors for $1 billion. Nook Media includes a college bookstore division and e-books and Nook e-readers and tablets. The report is based on internal documents obtained by TechCrunch.

Nook Media plans to discontinue its use of Android from Google Inc. (NASDAQ: GOOG) by the end of 2014 and transition to a Windows environment for the Nook products. The documents obtained by TechCrunch also indicate that Nook Media would introduce third-party tablets sometime in 2014.

Shares of B&N are getting a real boost from the report, up more than 27% in premarket trading this morning at $22.61, a new 52-week high if it holds. The current range is $11.17 to $19.58. B&N shares topped $26 last year when the Microsoft investment was announced.