Dell shares plummet on lowered sales forecast

Computer maker warns of 'uncertain demand' for rest of fiscal year

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Shares of Dell (NASDAQ: DELL) fell more than 10% in Wednesday trading after the computer maker lowered its sales forecast for the rest of the year.

Dell's stock was down 1.69, or 10.7%, to 14.11 early Wednesday afternoon following Tuesday's second-quarter earnings release.

[Dell expects Windows 8, Android to boost tablet market and Standard & Poor's gives Google the U.S. debt treatment]

Despite posting net profit of $890 million in the second quarter, up 63% from the year-ago quarter, and non-GAAP net income of 54 cents a share -- easily topping analysts' estimates of 49 cents a share -- Dell was punished for warning shareholders about a "more uncertain demand environment" for the rest of the fiscal year.

(As one of my colleagues noted, a "more uncertain demand environment" is a great euphemism for "fewer people are buying our products." Write in with your own euphemisms!)

The demand problem is reflected in the Q2 numbers. Product revenue (excluding software) was about the same as in last year's second quarter, with desktop revenue down 3%.

Further, Dell slashed its revenue growth projects for the full year to 1% to 5% from the previous range of 5% to 9%, and said it expects third-quarter sales to be about the same as Q2's.

In addition to tablets stealing consumer dollars from PC sellers, continued global economic uncertainty could curtail enterprise spending, while deficits will put downward pressure on spending by governments, one of Dell's primary product markets.

Dell's revenue warning appears to have had a negative impact on shares of Hewlett Packard (NYSE: HPQ), which were down 1.45, or 4.4%, to 31.16 in Wednesday's mid-afternoon trading.

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