By Kasper Jade

Published: 02:00 PM EST

Shares of Apple Computer rival Dell Inc. slid over 5 percent on Tuesday morning after the company warned investors that earnings for its first fiscal quarter will fall below guidance as a result of recent price cuts aimed at maintaining its lead as the world's leading manufacturer of personal computers.

In the profit warning to investors after the close of the market on Monday, Dell said it will post earnings per share of approximately 33 cents for its fiscal 2007 first quarter and expects revenue of approximately $14.2 billion versus its original guidance of $14.2 to $14.6 billion and earnings per share of 36 to 38 cents, including an estimated three cents of stock-based compensation.

The personal computer maker attributed the shortfall to price cuts initiated in the second half of the quarter, which the company hopes will accelerate revenue growth in the future.

"During Q1 we continued to execute on our strategy to reinvigorate growth by making investments in our support infrastructure and product quality and by accelerating pricing adjustments," said Kevin Rollins, Dell's Chief Executive Officer. "We are committed to delivering industry leading value to our customers, which ultimately results in industry leading growth for the company."

While Dell's aggressive pricing in the quarter undoubtedly played a role in weaker than expected revenues and earnings, Ben Reitzes, an analyst at UBS Investment Research, said he believe there is much more to the story than just pricing decisions.

"We believe Dell continues to suffer from a number of secular issues that is preventing the company from realizing the success it did during the 2001 - 2004 time frame, a period we refer to as the 'Dell Era'," the analyst told his clients on Tuesday morning. "In addition to the negative pricing affects noted by Dell, we continue to believe there are five main issues that differentiate the current environment from the 'Dell Era' and believe that in such a different environment we may not see the same benefits of a drastic reset for several reasons."

Reitzes said these issues include less available market share to be gained by the company's direct model, a stronger array of competitors including HP and Lenovo, more modest component price reductions, and a healthier overall personal computer market.

He also believes the market has moved away from Dell's strengths and more towards emerging and consumer markets.

"HP may have an edge right now with channel relationships and AMD that lower prices simply cannot overcome," the analyst told clients. "In the enterprise, the market growth has moved toward blades or servers using AMD’s Opteron processor. Simply put, HP and even IBM may be better suited to address these growth areas, especially near-term."

Dell will formally announce its financial results for fiscal 2007 first quarter on May 18.