Jan. 17 (Bloomberg) -- Hewlett-Packard Co. beat Dell Inc. in sales of personal computers for the second straight quarter, extending its lead as the world's biggest PC maker.

Hewlett-Packard's market share increased 2.4 percentage points in the fourth quarter to 17.4 percent of the worldwide market, Stamford, Connecticut-based Gartner Inc. said in an e- mailed statement. Dell slipped to 13.9 percent from 16.4 percent. Overall PC sales growth slowed.

After trailing Dell for three years, Hewlett-Packard reclaimed the top spot in the third quarter while Dell began a $150 million project to address customer-service complaints. Hewlett-Packard added to its lead during the holiday season by using its network of more than 140,000 retailers, including Wal- Mart Stores Inc., to lure shoppers with low-cost laptops.

Hewlett-Packard boosted unit sales by 23.9 percent and shipped 2.3 million more PCs than Dell in the fourth quarter, Gartner said. Dell's shipments fell by 8.7 percent.

``This level of decline is unprecedented in Dell's history,'' Gartner analyst Charles Smulders said in an interview.

Total PC shipments rose 7.4 percent in the fourth quarter to 67.4 million, Gartner said. That compared with 16 percent growth in the same quarter last year. Falling sales of U.S. desktop computers for the home lowered the worldwide rate.

2006 Tie

In full-year PC sales, Dell, based in Round Rock, Texas, and Palo Alto, California-based Hewlett-Packard each had market share of 15.9 percent, tying for first place, Gartner said.

Research firm IDC, which also tracks the PC market, gave Dell the edge for the year, with 17.1 percent of the market compared with Hewlett-Packard's 17 percent. The worldwide market grew 8.7 percent, Framingham, Massachusetts-based IDC said.

Shares of Hewlett-Packard fell 71 cents to $42.49 in New York Stock Exchange composite trading at 4 p.m., before Gartner and IDC released their numbers. Dell fell 67 cents to $25.84 at 4 p.m. in Nasdaq Stock Market composite trading.

``We are particularly pleased with the continued momentum H-P experienced this holiday season,'' Todd Bradley, head of Hewlett-Packard's PC unit, said in an e-mailed statement.

China's Lenovo Group Ltd., which bought International Business Machines Corp.'s PC unit in 2005, remained in third place with 7.3 percent of the worldwide market, IDC said. Lenovo's Raleigh, North Carolina-based PC division shipped 4.77 million units worldwide, an 8.5 increase from a year earlier.

Top Five

Taipei-based Acer Inc. and Tokyo-based Toshiba Corp. retained their fourth- and fifth-place spots in the worldwide PC market, Gartner and IDC said.

Acer was the fastest-growing PC maker among the top five. Its sales rose 37.8 percent, according to IDC. Dell was the only PC maker in the top five whose sales shrank.

Dell, with its focus on direct sales to large customers, was hurt by slowing U.S. demand for business PCs, IDC said.

The company also was distracted by a U.S. Securities and Exchange Commission probe into its accounting practices, a battery recall and the need to improve operations, IDC analyst Loren Loverde said today in an interview.

``Dell, which has been renowned for its flexibility, is being distracted from maintaining their market share,'' Loverde said.

U.S. personal-computer shipments fell by 0.5 percent, according to IDC. Dell shipped 4.78 million units in the U.S., a 16.7 percent decline from a year earlier, IDC said.

Even with the lower sales, Dell kept the top spot in the U.S. with 27.9 percent of the market, IDC said. That was down from 33.3 percent a year earlier. Hewlett-Packard remained in second place in the U.S., followed by Gateway Inc. and Apple Inc., whose market share rose to 4.7 percent from 3.6 percent.

To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net

Last Updated: January 17, 2007 20:59 EST