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Last Updated: Friday, 21 July 2006, 18:17 GMT 19:17 UK
Dell issues fresh profits warning
Dell notebook computer

Shares in Dell, the world's largest PC manufacturer, have fallen sharply after it warned of disappointing profits for the second quarter in a row.

Texas-based Dell said it expected profits of 21 cents to 23 cents per share in the second quarter, way below analysts' forecasts of 32 cents.

The bad news pushed Dell shares down 13% in trading in New York.

Earlier this year, Dell was forced into price cuts to meet the threat from rivals like Hewlett-Packard and Lenovo.

Recruitment drive

Dell has tried to woo back customers by simplifying its online order process, which was seen as too complex.

Other moves the computer giant has taken to make its products more attractive include hiring more than 2,000 staff to join its customer service division.

Our take is that Dell's miss is largely about Dell
Laura Conigliaro, Goldman Sachs

The group is investing $100m on customer service, which Dell views as crucial to its market position.

The company said its earnings warning reflected "aggressive pricing in a slowing commercial market worldwide".

Analysts said that while the figures reflected the slowdown in global computer sales, they also showed that Dell had problems unique to itself.

"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," Laura Conigliaro, a Goldman Sachs analyst, said.

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