Updated from 12:31 p.m. EDT

The personal-computer market took another body blow Friday morning when Dell ( AMD), the world's No.1 PC vendor, warned investors that its second-quarter results would fall short of expectations.

Hot on the heels of mediocre quarterly reports from Intel ( INTC) and Advanced Micro Devices ( AMD), the two major microprocessor makers, the news wrought havoc on the shares of various PC players.

Dell shares sank nearly 12%, or $2.65, to $19.45 in recent trading Friday, marking the stock's lowest point in four years, while AMD was down 13.4%, or $2.90, to $18.75, a 52-week low.

Even Hewlett-Packard ( HPQ), which many believe is profiting at Dell's expense, saw its shares tumble more than 5% Friday, before moderating to a nearly 3% slide to $30.89.

"Our take is that Dell's miss is largely about Dell, although it does add yet another reaffirmation about the state of the commercial PC market, mostly in desktops," wrote Goldman Sachs analyst Laura Conigliaro in a note to investors Friday morning. Goldman makes a market in Dell securities and has provided investment banking and noninvestment banking services to Dell within the past 12 months.

For Round Rock, Texas-based Dell, the profit warnings are becoming a worrisome habit: Friday's warning marked the company's third negative preannouncement in its last four quarters.

Dell's latest revision pegs sales for the quarter ending Aug. 4 at $14 billion, while its profit will range between 21 cents and 23 cents a share.

Wall Street analysts were looking for Dell's second-quarter sales to total $14.2 billion, with earnings of 32 cents.

Earlier this year, Dell ended its practice of giving specific quarterly guidance figures. At the time, though, the company said second-quarter results would be similar to the first quarter, during which it had sales of $14.2 billion and EPS of 33 cents.

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.

But Dell's latest guidance makes it clear that the company has still not hit upon the magic formula.

Dell's projected revenue for the second quarter represents only 4% growth from the year-ago period. Earnings are slated to be roughly half of what they were in the second quarter of 2005, when Dell posted EPS of 41 cents.

Many investors and analysts continue to question whether Dell's strategy of cutting prices is really the cure to its troubles.

"The problem is that the market is not elastic enough for pricing to create sufficient incremental opportunity," wrote Goldman's Conigliaro.

Dell's poor positioning in notebooks, international, consumer and retail markets -- all areas where rival H-P is strong -- are the real issues that need to be addressed by Dell, suggested Conigliaro.