Dec. 1 (Bloomberg) -- Dell Inc., the world's second-largest personal-computer maker, lost the Black Friday retail battle against Hewlett-Packard Co. in Best Buy Co. stores, Thomas Weisel Partners said in a report.

Customers preferred Hewlett-Packard PCs 5-to-1 over Dell's during the three-day weekend, according to a survey of 35 stores conducted by Doug Reid, an analyst at Thomas Weisel. Best Buy is the largest U.S. electronics retailer.

Chief Executive Officer Michael Dell ditched the Round Rock, Texas-based company's direct-sales-only model in efforts to win back the PC sales lead held by Hewlett-Packard for more than two years. He put Dell products in 20,000 stores worldwide, starting with Wal-Mart Stores Inc. and Best Buy in the U.S.

``Dell has significant work to do,'' New York-based Reid wrote today in the report. ``The only negative comments in our survey with respect to brand were aimed at Dell, with survey respondents noting potential quality issues.''

The survey focused on the U.S. consumer market, which Reid estimated accounts for 13 percent of Dell's revenue. Consumer sales represent about 20 percent of total revenue worldwide.

Reid, who rates Dell shares ``neutral,'' said the company probably lost market share in the third quarter and predicted the trend would continue through the holiday season.

Dell, down 59 percent this year, lost $1.12, or 10 percent, to $10.05 at 4 p.m. New York time on the Nasdaq Stock Market.

Core Business

Dell's retail business is ``still growing,'' and the company is evaluating weekend sales, spokesman Bob Kaufman said today in a telephone interview.

``Our direct business, which is the core of what this company was founded on, was up strongly over last year's Black Friday,'' he said. Laptops were among the big sellers, said Kaufman, who declined to provide sales figures.

Dell ranked seventh on a list of the 10 most-visited online retailers on Black Friday, according to New York-based Nielsen Online. The number of users on Dell's Web site rose 26 percent from a year earlier. The day after Thanksgiving is called Black Friday because it was said to be when retailers began to turn an annual profit.

At Wal-Mart, whose online site ranked third, shopping visits more than double. The Wal-Mart site carries a wider variety of Dell products and colors than is available in stores and offers free shipping to a local Wal-Mart for pickup.

David Bailey, an analyst at Goldman Sachs Group Inc., visited 20 big-box retailers over the weekend and said Hewlett- Packard had a ``clear advantage'' with its dominant shelf space.

``PC promotions started earlier this year, taking some of the urgency out of Black Friday,'' Bailey said.

Apple `Resilient'

Apple Inc., maker of the iPod and Macintosh computers, proved to be ``resilient despite the weaker consumer spending environment,'' said Chris Whitmore, an analyst at Deutsche Bank AG, in a separate report.

Whitmore checked sales at more than 125 Apple stores and other retailers, including Best Buy. Demand was strong for the iPod Touch and Nano models, he wrote today. MacBook laptops were ``very popular,'' after product updates and Thanksgiving holiday discounting, said Whitmore, who advises buying Apple shares.

Goldman's Bailey called Apple a ``bright spot'' in a lackluster holiday season.

Apple, based in Cupertino, California, dropped $3.74, or 4 percent, to $88.93. The shares have fallen 55 percent this year. Hewlett-Packard, based in nearby Palo Alto, lost $1.84, or 5.2 percent, to $33.44 in New York Stock Exchange composite trading. It has declined 34 percent this year.

To contact the reporter on this story: Melita Marie Garza in New York at mgarza4@bloomberg.net

Last Updated: December 1, 2008 17:39 EST