Dell Computer Corp. on Thursday reported a net loss for the second-quarter, sharply off its year-ago performance, as the top personal computer maker continued to lead the industry into a price war and gained market share.

Including a pretax charge of $742 million for job reductions, closing some facilities, and impairment of assets, Dell reported a net loss of $101 million, or 4 cents a share, compared with a net profit of $603 million, or 22 cents per share a year ago.

Excluding the charges, the Round Rock, Texas-based company posted a second-quarter profit of $433 million, or 16 cents per share, in line with analysts polled by Thomson Financial/First Call. Dell said its sales were $7.61 billion, roughly flat with the same period a year ago, and just missing analysts' average hopes of $7.71 billion.

Even so, the company managed to continue to gain share against competitors in an overall, weak market for personal computers as its build-to-order model allows it to move more nimbly than its rivals, taking advantage of declining prices for components such as memory.

At the same time, it gave an outlook for the third quarter that was a bit more grim than most were expecting. Instead of forecasting revenue to be about flat with those in the third quarter, it cautioned that they may fall as much five percent sequentially. On top of that, executives said that overall PC industry revenues could decline 5 percent to 10 percent from the second quarter.

``If you look at the guidance, it was surprising because most people assumed they'd be giving pretty flattish revenue guidance,'' said Lehman Brothers analyst Dan Niles. ``What's more important than that is what they said about the industry.''

``That's the more telling statement because they're gaining more market share than anyone,'' Niles said. ``Numbers will have to come down across the street.''

In addition, Dell said on a conference call with reporters that once the economy picks up -- in both the United States and overseas -- the computer company should be well positioned to continue to gain share, and to reignite sales and profit growth. He reiterated earlier comments that he sees an overall pick-up in demand not occurring before the Spring of 2002.


The plunging PC prices are highlighted by the fact that while Dell's unit shipments of PCs increased by 19 percent from a year ago, sales were virtually unchanged. Continuing rampant price competition pushed Dell's gross margin -- the amount left after subtracting product costs -- to 17.5 percent of sales.

Prior to the company's earnings release, Dell shares ended Thursday Nasdaq trading off 12 cents, or 0.5 percent, at $25.38. The shares have traded in a 52-week range of $44.06 and $16.25.

Dell stock has risen more than 40 percent this year and outperformed its biggest rival, Compaq Computer Corp. by more than 50 percent as Dell took the No. 1 global PC sales spot.

The company said that it posted 33 percent growth in shipment of systems aimed at large businesses, which it has earmarked in recent quarters as important to higher profits.

``We increased shipments strongly in a down market, particularly in enterprise products,'' Dell said in a statement, adding that the company ``gained more than two points of overall market share.''

Dell says its direct sales model, meaning it does not have to share profits with resellers or keep much product on hand, has allowed it to push down prices and take market share from competitors despite tough times in the industry, which appears to be shrinking.