There was a time when Dell Computer's story was all about high-flying growth rates and a stellar stock price. This week, the company had to settle for decidedly lower altitudes.
Dell, which once boasted annual revenue increases of more than 50 per cent, set its sights on a more modest 20 per cent rate for the next financial year as it reported third-quarter results after the market closed last week. The company employs 6,000 in Ireland.
Shares in the world's second largest personal computer maker, which have fallen steadily since July, plunged further the following day, pulling many of its competitors down in sympathy.
IBM, Compaq, Gateway and Hewlett- Packard all sank, closely followed by Intel and AMD, the PC industry's chip suppliers.
The declines highlight longstanding worries over the fortunes of the maturing PC market, where industry watchers have pointed to slowing demand, particularly in the corporate desktop arena.
Dell's lower growth forecast also focuses attention closer to home, on the company's ability to predict its own performance in its increasingly uncertain sector. The company has either missed forecasts or adjusted its own estimates in four of the past five quarters.
Analysts suggested that Dell had posted a relatively low forecast to give itself a target that it could meet or beat in the coming quarters.
Ashok Kumar, of US Bancorp Piper Jaffray, said: "It's critical for the company to set the bar low enough so that it can consistently exceed expectations and rebuild the management's credibility."
Dell's credibility has taken quite a battering in recent months.
The company's stock took a dive in October when it warned that its operations were being hit by slower than expected sales to the European corporate sector and dot.com companies across the world.
The news came against a broader background of slowing sales to the corporate sector.
Windows 2000, Microsoft's latest operating system aimed at the business user, has not produced the expected boost to PC sales that Dell and others were expecting. There are tens of millions of PCs that could be upgraded to run the operating system. But upgrading is no small task.
Analysts have also pointed out that Dell's famed direct-selling business model no longer gives it as big a relative advantage over its competitors as it did in the 1990s and before.
Dell's growth rates still dwarf those of its competitors. Compaq reported sales were growing in the mid-teens in its most recent quarter. However, Compaq has been quick to follow Dell's example and Dell's lead has been shrinking.
There are also doubts over whether Dell's direct model will work beyond its core US-based PC operation. There have been signs that Europeans outside the UK have been more reluctant to buy expensive systems over the telephone or online.
Furthermore, it remains to be seen how well direct-selling works in the high-end corporate systems market.
It was not all bad news for Dell.
Some analysts saw the adjusted sales forecast as a welcome adjustment from the company as it moved towards more profitable lines.
Don Young, an analyst at UBS Warburg, says the revised estimate shows a more focused growth strategy on servers and storage and he is bullish about the future, predicting that the company could return to 25 per cent growth rates in the long term.
Michael Dell, Dell's chairman and chief executive, is also quick to defend the 20 per cent target, calling the figure a respectable one for a company of Dell's size.
Growth rates of 50 per cent may have been possible for the sprightly Dell of the 1990s, but these days it is a question of scale.
"It's hard to grow $6 billion [€6.94 billion] or $7 billion a year," said Mr Dell as the company released its results. "It's even harder to grow $8 billion or $9 billion."
