Computer makers are scrambling to adjust to rapidly deteriorating demand for personal computers, cutting prices as they brace for what is quickly shaping up to be a cheerless holiday season.

Dell Inc. and some retailers are even offeringdiscounts of 20% to 30% on new notebook computers, chipping away at profits in a segment that has enjoyed healthy demand.

Until now, the $263 billion PC sector had shown resilience amid a slowing economy: World-wide PC shipments rose at least 12% in each of the first three quarters of the year. But PC sales have stalled in recent weeks as consumer spending has plunged.

Research firm IDC is preparing revised numbers that it could release as soon as Friday that project a 1% drop in U.S. PC shipments for the fourth quarter compared with a year earlier. IDC had previously expected U.S. shipments to rise 6% in the typically robust holiday sales period.

Signs of the reversal are starting to surface. In the past week, major PC retailer Circuit City Stores Inc. filed for bankruptcy and rival Best Buy Co. slashed sales expectations. On Wednesday, chip giant Intel Corp., which just a month ago was projecting 3% growth, warned Wednesday of sharply lower fourth-quarter sales 'in all geographies and market segments.'

The deteriorating PC climate portends poorly for Hewlett-Packard Co., the market leader with 19% global share in PC shipments, and Dell, which has roughly 15% share, according to IDC. While H-P -- which reports quarterly earnings Nov. 24 -- has businesses like printers and information-technology services that may help buffer it from the PC slowdown, analysts say disappointing October PC sales will hurt its earnings.

On Thursday, Citigroup reduced its revenue estimate for H-P and Dell in a research note titled 'The PC Industry Slips Into Recession.' Analyst Richard Gardner wrote that 'lack of credit, declining corporate profit margins, rising unemployment and a stronger dollar are all negatively affecting corporate and consumer PC growth.'

Any comedown for H-P's PC sales would mark a major reversal for the business, which has been growing robustly for the past few years. H-P has expanded its PC business's profit margins, but retailers have started selling its computers at sharp discounts. At Best Buy, an H-P laptop with a 15.6-inch-screen was recently selling for a nearly 25% discount at $549.99.

An H-P spokeswoman declined to comment.

The price wars may wipe out already-thin PC profit margins, which typically hover at 6%. Such risks were already evident for Dell during its last reported quarter, when the Round Rock, Texas, company increased its consumer PC sales even as that division failed to make a profit. A Dell spokesman says the company is known for its value.

Last week, Chinese PC maker Lenovo Group Ltd. reported a 78% drop in quarterly profit from a year earlier. Its gross profit margin slipped from 14.1% to 12.6% as the company blamed diminished demand and 'aggressive pricing' for falling profits.

One exception to the trend may be Apple Inc. The Cupertino, Calif., company chose to pack more features into new aluminum MacBooks it unveiled last month, rather than drastically cut prices. The new aluminum MacBooks start at $1,299 and range upwards of $2,000. That's far higher than the $843 average selling price of notebooks overall, according to NPD Group.

Justin Scheck / Yukari Iwatani Kane