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Ahead of the Bell: Dell down in premarket trading

Worries about competition from other tech companies and spending cuts from government customers drove Dell shares lower in premarket trading Wednesday.

On Tuesday, the computer maker said its fourth-quarter profit dropped 18 percent to $764 million, and its revenue prediction for the current quarter was short of Wall Street analysts’ expectations.

Like other PC makers, the Round Rock, Texas, company was squeezed in the past quarter by parts shortages caused by massive flooding in Thailand in October. The fallout from that catastrophe temporarily closed Thailand factories that churn out hard drives, driving up the prices that Dell had to pay for them.

But Dell also has other problems. Cutbacks at government agencies facing budget deficits have added to Dell’s troubles in the U.S. and Western Europe. And consumers are increasingly choosing sleek tablets and smartphones made by Apple Inc.

Sterne Agee analyst Shaw Wu maintained his underperform rating on the stock, saying that investors have underestimated the competitive threat to Dell from Apple and other rivals such as Acer, Lenovo and Hewlett-Packard.

Shaw said Dell may have a difficult time improving its operations.

Dell representatives could not immediately be reached for comment early Wednesday.

Dell expects its revenue for the quarter ending in April to fall about 7 percent from the just-completed quarter, to $14.9 billion — about $100 million below analyst estimates.

But the release of Microsoft Corp.‘s next operating system, Windows 8, could help Dell and other PC makers meet growing demand for more tablet-like experiences. A specific timetable for Windows 8’s release hasn’t been announced, but analysts expect it to hit the market in late summer or early autumn.

Dell fell $1.24, or 6.8 percent, to $16.97.

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