Dell Feeds Slowdown Fears

Dell blamed a slowing commercial market worldwide, along with aggressive price cuts of its products, for its woes.

But the PC maker cited recent figures from research firm IDC that showed it gained one percentage point of market share in the second quarter as evidence that its direct sales model continues to put the PC maker in a strong competitive position. Dell added that its recent investments to improve the customer experience was also a factor.

"All of our initiatives are focused on providing the best value experience and products to our customers every day, which will maximize shareholder value over the long term," said CEO Kevin Rollins in a statement.

Investors were not so sure.

"They seem to be having some issues executing," says Pat Becker Jr., of Becker Capital Management, which doesn't currently own Dell shares.

"You have the PC market decelerating this year," Becker says. "And whenever you're in a decelerating environment it's more difficult to run your company vs. the year before."

Still, Becker said Dell's strong brand and balance sheet could make the stock an attractive buy once it stabilizes its margins.

Dell is struggling to find the right balance between growth and profit. In May, company executives confessed that the company had been too focused on maintaining beefy profit margins. "Our belief is that over the last year or so we let margins float up and allowed our growth to essentially come to a stall," CEO Kevin Rollins said in a conference call.

Going forward, Dell executives emphasized, the company would slash prices to ensure sales growth above 6% while maintaining acceptable margins. Earlier this month, Dell unveiled a sweeping change to its pricing model, eliminating its use of rebates and promotions in favor of lower list prices.