Austin, Texas-based Dell expects sales of $8 billion in the quarter ending Feb. 1, up from its previous projection of $7.6 billion. It raised its earnings per share forecast to 17 cents from 16 cents. 

Analysts' consensus earnings estimate was 16 cents a share on revenue of $7.66 billion, according to Thomson Financial/First Call. 

``Dell's announcements are specific to them and it should come as a surprise to no one that they are rapidly gaining market share. And even with the significant discounting going on they are able to raise their sales forecast,'' said Tim Ghriskey, a senior partner with Ghriskey Capital Partners. 

"They just have a great model. I don't think it necessarily 

says anything about the state of the industry." 

Market research groups IDC and Gartner Dataquest Thursday indicated Dell had been having a strong quarter when they reported it increased its U.S. and worldwide market share in the fourth-quarter while competitor shipments fell. 

Wall Street analysts have said in recent weeks they expected Dell to have benefited as consumers bought more computers than expected during the holiday season, which is typically the strongest time of year for PC makers. 

Dell's improved outlook comes during a week in which competitor Compaq Computer Corp., another big player in the consumer PC market, announced better than expected revenue and earnings. 

Compaq's gains, however, came from its high-end computer business as its PC division turned in another quarter of losses. 

Dell took over from Compaq as the No. 1 PC maker in 2001, during a period of weak demand for personal computers from both corporations and consumers and as Dell mounted an aggressive price war and marketing campaign. Compaq now plans to merge with Hewlett-Packard Co. 

Dell's advantage comes from its direct-sales business model. The company builds and ships computers to customer specifications, selling over the phone and through its Web site. This enables it to minimize the inventory typically associated with retail sales and to squeeze profits out of machines sold at very low prices. 

``They are the low cost producer and took full advantage of the decline in component pricing and they have now a sizable lead in the U.S. over Compaq,'' said Alan Loewenstein, coportfolio manager at John Hancock Technology Fund. 

Loewenstein attributed that share -- about 25 percent compared with Compaq's share of around 12 percent according to Gartner Dataquest -- to the company strong marketing efforts. 

Dell's most recent marketing campaign has popped up in stories in national publications for its quirky holiday commercials in which a twenty-something spokesperson named ``Steven'' tells consumers, ``Dude, you're getting a Dell.'' 

Dell expects fourth-quarter shipments to consumers to increase 50 percent and sees revenues from its consumer business growing 40 percent from its fiscal third quarter. 

It expects worldwide shipments in the fourth quarter to be up at a strong double-digit percentage rate compared with the year-ago quarter. 

Dell was able to take advantage of lower component prices in the fourth quarter, but it is unclear how long that will last, Lehman Brothers analyst Dan Niles said in a research note prior to Dell's announcement. 

Prices for personal computer components, such as memory, have been on the rise since December, Niles said. 

That likely affected Dell's fourth quarter margins and will fully hurt its first-quarter margins, Niles wrote. 

Dell shares were down 1.7 percent at $28.47 in afternoon Nasdaq trade, while the American Stock Exchange Hardware index was off nearly 3 percent. Dell shares gained 56 percent in 2001, while the hardware index was off 25 percent in that time. Dell is due to report earnings Feb. 14.