The world's No. 3 personal computer maker projected sales would be down 7 percent this quarter from the previous quarter, when it posted revenue of $16 billion. That translates into about $14.9 billion, below the average forecast for roughly $15.2 billion.

Dell's fiscal fourth quarter earnings also came in below Wall Street's view as strength in its corporate business unit was offset by the weakness in the division that caters to public businesses.

Chief Financial Officer Brian Gladden said profit margins for the quarter were hurt by a combination of weakness in U.S. public spending, discounting of the leftover inventory of its previous generation phones and the lingering impact of the Thailand flood on its product mix.

"We just didn't get the mix of drives that we wanted and it really forced us to sell less configured lower-end systems and prevented us from accessing higher margin more highly configured systems," he said.

Gladden said he expected the hard-disk drive issues to continue this year.

PC makers have grappled with slackening demand as mobile devices such as Apple Inc's iPad erode market share, while a shortage of hard drives after flooding in Thailand crimped supply.

Investors were disappointed by the "lack of the upside in the quarter," ISI Group analyst Brian Marshall said. "It's going to take a little bit of time for Dell to turn around the tanker ship."

"They have $65 billion revenue and it takes a long time to move the needle to more strategically relevant revenue sources and we are just not seeing signs of progress yet," he said.

Dell has been trying to boost profit margins by getting out of low-margin businesses and focusing on being a one-stop-shop for business customers.

For fiscal 2013, the company said it expects non-GAAP earnings per share to exceed $2.13.

ENTERPRISE BUSINESS SHINES

Revenue in Dell's fiscal fourth quarter was up 2 percent at $16 billion, in line with the average analyst estimate of $15.96 billion according to Thomson Reuters I/B/E/S.

The company posted a net income slide of 18 percent to $764 million, or 43 cents a share, for the period, down from $927 million, or 48 cents a share, a year earlier. Excluding one-time items, it earned 51 cents a share, a penny below the 52 cents expected.

Dell's large-enterprise business held up well, increasing sales 5 percent in the quarter to $4.9 billion, as corporations continued to upgrade aging hardware.

Gladden told Reuters that he expects business spending in Dell's enterprise unit to continue to be strong this quarter.

Dell's public business generated revenue of $3.9 billion, which was down 1 percent from a year ago due to weakness in the United States and Western Europe while Dell's sales to consumers fell 2 percent over the same period.

Dell's gross margin rose to 21.1 percent from 20 percent a year earlier.

The shares of Dell, which vies with market-leading Hewlett Packard Co, slid to $17.36 in extended trading after closing on Nasdaq at $18.21.

(Reporting By Poornima Gupta; editing by Richard Chang and Andre Grenon)

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