Dell’s Warning May Signal Change

Dell’s first earnings warning in five years had analysts debating whether the company’s disappointing earnings and sales were a company-specific problem or a sign of broader weakness in IT spending.

Most analysts seemed to think that the warning that shaved 8% off Dell’s share price Tuesday was the result of tougher competition and Dell’s new focus on higher-margin products.

Much of Dell’s success has come from its ability to cut costs and steal market share from rivals, but Bernstein analyst Tony Sacconaghi told CNBC that Dell stopped growing faster than the broader PC market this quarter.

With six straight quarters of decelerating sales, analysts said that growth estimates for Dell may have to come down. CS First Boston said that 15% sales growth projections for Dell may have to come down to 10-12% as the company tackles new approaches and markets.

Investors will get more information in coming weeks. Dell will officially post its results and hold a conference call on Nov. 10, and a week later, HP will post its results. If HP’s numbers are fine, then analysts may be right about Dell.

Stocks pulled back Tuesday after the Federal Reserve raised interest rates for the 12th time in 16 months and suggested that the rate hike campaign will continue.

The Nasdaq lost 6 to 2114, the S&P 500 fell 4 to 1202, and the Dow dropped 33 to 10,406. Volume declined to 2.46 billion shares on the NYSE, but rose to 1.97 billion on the Nasdaq. Decliners led 17-15 on the NYSE, and 17-12 on the Nasdaq. Downside volume was 60% on the NYSE, and 53% on the Nasdaq. New highs-new lows were 93-107 on the NYSE, and 97-73 on the Nasdaq.

After the close, EDS beat estimates, Sun missed sales estimates, and Symantec fell 8% on a warning.

During the day, Computer Sciences jumped 13% on a Wall Street Journal report that the company is in acquisition negotiations with a group led by Lockheed Martin , and the price could be more than 10% higher than Tuesday’s closing price.

724 Solutions rocketed 38% on a deal with Ericsson .

InterActiveCorp rose 2% on its results, and Rackable Systems and Radvision jumped 16% each on their numbers.