Shares of Dell Computer slumped yesterday after the second largest maker of personal computers said it expected slower sales growth next year, causing the entire technology sector to sag under the weight of concern about PC sales.

The damage also spread to Intel, which makes the processors for Dell computers, and Microsoft, which supplies the operating systems. The sales warning came as investors realised that the big growth years in the PC industry have passed, analysts said.

On Thursday, Dell, which employs 4,500 people in Limerick and Bray, Co Wicklow, reported third-quarter net income rose to $674 million, (or 25 US cents per share), from $483 million, (or 18 US cents per share), a year earlier.

That met the analysts' consensus estimate of 25 US cents per share, according to First Call/Thomson Financial, which tracks brokerage estimates.

Sales rose 22 per cent to $8.3 billion (€9.62 billion).

Dell shares fell $5.12 1/2, around 18 per cent, to $23.31 1/4, giving up about three weeks of steady gains, after the Round Rock, Texas, company set an outlook of 20 per cent sales growth for fiscal 2002 in its earnings report on Thursday.

That was well off the more than 50 per cent growth rates that made Dell the must-own technology stock in the 1990s, when it was the top performer of the S&P 500. The latest outlook was also the fourth time Dell had lowered growth targets this year.

Analysts said Dell was not moving smoothly into the faster growing markets for business computers, which account for about 19 per cent of its sales, in an effort to decrease its dependence on desktop PCs, which make up 48 per cent of sales.

Credit Suisse First Boston analyst Mr Kevin McCarthy wrote in a note to clients that Dell must quickly reduce its dependence on desktop revenues and establish a presence as an enterprise supplier.

Other computer makers fell along with Dell, including IBM, Apple and Hewlett-Packard. Intel and Microsoft, which supply Dell, also fell, as did Sun Microsystems.