It looks like Dell (NASDAQ:DELL) has figured out how to grow market share in a slumping economy. But that small victory comes at a steep cost.

Just the facts, please
Fourth-quarter sales for the computer giant came in at $13.4 billion, 16% below the year-ago quarter. GAAP earnings fell from $0.31 per share last year to $0.18 this time. That's about equal to the state of affairs at Hewlett-Packard (NYSE:HPQ), where we saw acquisition-adjusted sales drop about 16% year over year. IBM (NYSE:IBM) did better than that, reporting stable sales and growing profits in spite of the recession.

Dell's worst performance came in its corporate segments; commercial sales dropped by 17% or more around the world.

That leaves the consumer market, where Dell thinks that it grew market share during the quarter. An 18% increase in unit volume led to 7% fewer dollars collected, which was $3 billion. "More consumers [are] choosing lower-priced notebooks and desktops," explained the earnings release. So, Dell is in the deep-discount business now, catering to the lower end of the computer systems market. I'll remember that the next time I need a new laptop.

Upside, meet downside
But I'll also remember it the next time I want to buy a stock. The tiny margins of low-end systems may help Dell protect its market share, and may even lead to higher sales somewhere down the road. But it's also a recipe for shrinking profits. Wal-Mart (NYSE:WMT) is fabulously profitable, but it takes $406 billion of revenue to generate $13 billion of net profit for Arkansas' finest.

Dell may be big, but it still can't compete on quite that scale. Despite claims of stronger cost reductions than expected, Dell's profit margin was cut to 2.6% from 4.8% last quarter. Ouch.

What it all boils down to
The company remains profitable and cash-flow positive, which gives Mike Dell and his crew some time to right this floundering ship. But it's still going down as we speak. I might buy Dell stock in the future, but it's just too risky for me today. It might be a long way to the bottom.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here, and this article was written on an HP-branded laptop. He is wondering where he should ship these flounders. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.