Nov. 21 (Bloomberg) -- Dell Inc., the world’s second-biggest personal-computer maker, fell 5.2 percent in Nasdaq trading after sales trailed analysts’ estimates by more than $1 billion, hurt by slowing U.S. technology spending.

Analysts at UBS AG, Needham & Co. and Friedman Billings Ramsey & Co. lowered their price estimates on the stock after Dell said yesterday that third-quarter revenue fell 3.1 percent to $15.2 billion. That trailed the $16.4 billion average of estimates compiled by Bloomberg.

Revenue from the Americas, which make up almost half the total, fell 7.7 percent after customers pared budgets to shield themselves from recession. Even before the slump, Chief Executive Officer Michael Dell sought to wring more out of sales, cutting almost 11,000 jobs since taking back the reins and helping profit beat projections last quarter.

“I was expecting the worst and it was a mix of good and bad,” said Paul Meeks, equity research director at L.R. Burtschy & Co. in Charleston, South Carolina, in a Bloomberg Television interview. “I would expect that numbers would clearly come down, particularly on a revenue basis.”

Dell, based in Round Rock, Texas, dropped 51 cents to $9.30 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have declined 62 percent this year.

Dell has eliminated 13 percent of its workforce since its high point last year. Dell is aiming to save $3 billion a year by 2011, while expanding sales to almost 20,000 retail outlets, including Wal-Mart Stores Inc. and Best Buy Co.

Dramatic Gain

“They’ve had some product innovation in the consumer category, but most of the dramatic gain is from cutting back on salaries, raises and marketing,” said Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco. He has a neutral rating on the shares and doesn’t own any.

Third-quarter net income was $727 million, or 37 cents a share, a 5.1 percent decline from a year earlier, Dell reported yesterday. That topped average estimate of 33 cents in a Bloomberg survey.

“Given the choice between profits and growth, we are going to go for profits,” Michael Dell said on a conference call. “With the changes we are making in our cost structure, we think we are going to be able to do both of those together.”

Operating costs fell 11 percent, helping Dell to expand gross margins to 18.8 percent from 18.5 percent a year earlier. Gross margin is the percentage of sales left after deducting the cost of production. The company cut almost $1 billion in annual operating expenses from the year-earlier period, Chief Financial Officer Brian Gladden said.

Cheaper Manufacturing

Dell also overhauled its manufacturing, limiting the number of options for custom computer orders, and now relies on contractors to make a quarter of its products, mimicking the production strategy of Hewlett-Packard Co.

“The long-term restructuring story is intact, despite the continued battle between revenue and margins,” Bank of America analyst Scott Craig said in a note to clients today. Craig advises buying the shares and doesn’t own any.

Dell’s desktop PC revenue fell 14 percent to $4.08 billion, while sales of laptops, which are increasingly popular with consumers, rose 2.5 percent to $4.85 billion. Software and peripheral sales gained 2.1 percent to $2.59 billion. Revenue in Europe, the Middle East and Africa declined 5.1 percent to $3.27 billion.

This week, Hewlett-Packard reported profit that beat analysts’ estimates and forecast growth in 2009, signaling the computer maker may withstand a global recession. Gladden declined to issue any forecast for Dell.

Hewlett-Packard, which has held the PC market lead for more than two years, continues to diversify. The Palo Alto, California-based company said in August that it closed the $13.2 billion purchase of Electronic Data Systems Corp. to expand its services business.

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

Last Updated: November 21, 2008 16:10 EST