Dell Computer shares have taken a severe hit following slower-than-expected sales growth for the fourth quarter. Despite posting a 49.2 per cent increase in net profit to $425 million (€378.55 million) for the three months to the end of January, the markets were unimpressed with revenues which rose just 38 per cent to $5.2 billion.

From the opening bell on the Nasdaq market in New York, Dell shares traded in enormous volumes and, from the overnight level of $883/4, fell as low as $773/8 before recovering in later trading with traders taking the view that the shares were oversold in the opening session. The shares recovered steadily and closed down $6.38 on $82.38.

The quarterly profits were in line with analysts expectations, but, for the first time, Dell failed to achieve year-on-year quarterly growth in sales in excess of 50 per cent. Wall Street had expected sales for the quarter to reach $5.5 billion, leaving a $300 million shortfall.

Mr Kevin Rollins, vice-chairman of Dell, attributed this to failure to compete aggressively on price for corporate orders. "We probably didn't move ahead as aggressively on our win rates in the third quarter as we should. In hindsight it would have given us more top line."

Dell, which has pioneered the direct sales model to become the third largest PC seller in Europe, benefited significantly from sales over the Internet reaching $3 million (€2.67 million) per day in the fourth quarter.

The company grew at three and a half times the European PC market rate, making it the fastest growing PC vendor in the region with an 11.6 per cent market share.

For the first time, Dell became the number one computer seller in Ireland, where it currently employs 4,150 people, and has committed to employing 6,000 people by 2000.

He said Dell's buoyant European growth is largely being driven by increased global IT spending on the millennium bug problem and the euro. Further sales will be boosted by the rollout of new Microsoft suites, soaring Internet adoption and improvements in broadband communications.

Earnings per share for the year were $1.05, a 64 per cent increase over last year. Dell also announced a two-for-one stock split for the seventh time in seven years.