Expectations were high for last night’s report from Dell and the results simply weren’t good enough to please investors. Dell reported that their earnings fell 54% from a year ago and Wall Street slaughtered the stock today, with the stock down about 10% in afternoon trading. Dell earned 17 cents per share on revenue of $12.9 billion. The earnings number was lower due to one-time items, but the revenue being so light really concerned the street. Expectations were that Dell would likely beat estimates of $13.2 billion, but rather they missed the number quite badly.

The entire tech sector has been taking a hit today because of these worst than expected earnings from a tech bellwether. Cisco, Intel, Microsoft, and others have all dropped today in sympathy. Dell saw its gross margins take a major hit, falling to 17.3% from 18.8%. Dell’s personal computer business saw revenues drop more than expected, with desktops falling 26% and notebooks by about 14%. Many on the street are saying there are a couple reasons for the poor personal computer numbers from Dell; the first being that Dell is too heavily levered to the corporate side of business which has been slow to recover, and the second is the company is losing PC market share to its competitors. Dell did say it says IT spending increasing in the coming months, but investors shrugged off that news.

It is too soon to tell whether this report really means a whole lot to the market and the economy as a whole in the long run. This report could mean that the economy isn’t as good as some think, or it could just mean that Dell is being beaten by its rivals. The 10% decline in Dell’s shares as well as the overall decline in the NASDAQ do show that investors have very little tolerance for lighter than expected sales figures in this environment.

The holiday sales for technology companies are going to be vital to the economy recovery. Let’s hope that things can get turned around for good, but be prepared to make wise investment moves in case they don’t as well!