In what can be termed as a 'mixed' message to the investors, the Round Rock, Texas-based, world's second ranking computer seller, Dell Inc has said that while the stabilizing demand would bring about a sequential increase in sales in the ongoing quarter, there would be a "modest" decline in the profitability of the company.

Figuratively speaking, Dell would likely report a 23.6 percent fall in its quarterly revenue, and a profit of 24 cents a share; as against the same-quarter year-before figures of

31 cents a share.

In addition, Dell also said that though customers continue to put off new IT purchases, the year-on-year demand for the company's IT products is showing signs of stabilization. Brian Gladden, the Chief Financial Officer of Dell, said the company is positive that "demand return to more typical levels at some point."

While the company cited increased component costs, competitive pricing environment and an unfavorable mix of products as the reasons behind its reduced margin outlook, analysts said that the key reason was the increasing popularity of the economical, low-margin netbooks.

Though there has been an improvement in the sales figures for the IT industry, after over 20 months of decline, the main contributors to growth are essentially the netbooks, mini-notebooks with small screens and low-powered processors, which are priced below $500 and have tight margins.