Updated from 12:30 a.m. EST

Dell is preparing a move into cell phones as early as next month, the

Wall Street Journal

reports, citing people familiar with the matter.

The computer company has had a group of engineers working on the phones for more than a year from an office in the Chicago area, these people said, according to the newspaper. They produced prototypes built on

Google's

(GOOG) - Get Report

Android operating system and

Microsoft's

(MSFT) - Get Report

Windows Mobile software.

The

Journal

reports Dell is focusing on so-called smartphones, higher-end devices that include features such as Web browsing and email, including one with a touch-screen similar to

Apple's

(AAPL) - Get Report

iPhone.

Dell is trying to increase its sales as its mainstay personal-computer business struggles in the recession, the

Journal

reports.

Shares of Dell slid Thursday on news that $280 million in expenses related to restructuring efforts and stock-option expenses would cut deeply into its fourth-quarter results.

Dell closed down 4.5% to $9.50 Friday.

This article was written by a staff member of TheStreet.com.