D-Day beckons for Dell - but how exactly did it all go wrong?

Dell, the world's biggest manufacturer of personal computers, faces a showdown with Wall Street as investors fret that the once-unbeatable company is losing market share.

Kevin Rollins, Dell's chief executive, stands accused of the worst of corporate sins: complacency. And the company's shares look set to be punished further this week if the latest quarterly results news is not accompanied by a convincing plan to wrest market share from a resurgent Hewlett-Packard.

The only trouble is that Wall Street's analysts are not entirely agreed on what has gone wrong at Dell.

The company's sales surged past H-P's in 2001 thanks to its strategy of selling PCs direct to consumers online, cutting out the retailer and allowing it to undercut its rivals' prices. That attracted additional sales that meant it could buy components in bulk and cut prices still further. Then, last year, its growth rate slowed sharply and a profits warning last week was the latest distress signal.

"We have no ready explanation for the implosion in the Dell story beginning in the second half of last year," Charlie Wolf, an analyst at Needham & Co, said. "And I don't know if we will get anything clarified on the earnings conference call on Thursday. It could be that the company doesn't understand it. It is like a mystery novel. Whodunnit?"

Mr Rollins gave two reasons as to why profits will fall short of forecast this year. The company is cutting prices for new PCs at the same time as it puts more money into after-sales services including customer call centres.

But the underlying ailment - the cause of its decline in market share, which has dipped below 30 per cent in the US - remains undiagnosed by the company. With zero growth in the US at the moment, and with H-P already having a stronger international presence thanks to its acquisition of the Europe-focused Compaq, Dell could lose the global No 1 position within 18 months.

Investors posit different explanations for the problem for different parts of the Dell business. In the home computer market, it seems the trend towards buying hardware over the internet might have gone as far as it can. With music, video and even television starting to be channelled through the personal computer, the purchase is more important than ever. More people are looking to try before they buy, and Dell's rivals, with better links to retailers, are winning these customers. At the same time, Dell's helplines, which are vital for those who have bought direct from the manufacturer, are getting a reputation for poor customer service.

H-P, since the bloody replacement of the chief executive Carly Fiorina with Mark Hurd last year, has got a grip on costs and assembles all its PCs in China. Together with cut-throat competition between computer retailers, there is no longer a vast difference in price between an online Dell store and a shop-bought rival.

The company has a market share approaching 45 per cent for sales of computers to large businesses, and the explanation for Dell's stagnation in this area also includes its decision to stick with Intel processors when H-P and others adopted the lower-cost AMD chips.

While rivals have closed the gap with Dell in the US, Mr Rollins has failed either to come up with ideas on how to react in the domestic market, or to switch the company's emphasis to overseas sales.

It has frustrated investors. Simon Clinch, the director of US equities at F&C Asset Management, said: "The pain is far from over. It would be a different case if Dell had been faster to recognise the cost disadvantage of sticking with the Intel chip architecture over AMD's, the rising competitiveness of Hewlett-Packard's products, and the importance of customer service and innovation in maintaining brand quality.

"We don't doubt Dell will recover in time, but until there is a change in management attitude, or a change in management, we feel the risk/reward is simply not balanced in the investor's favour."

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