SAN FRANCISCO (AP) — Dell Inc. said yesterday that its net income dropped 54 percent in the latest quarter amid signs the company isn't fully benefiting from the computer industry's fledgling recovery.

Dell's numbers missed Wall Street's forecasts, and the shares fell almost six percent in extended trading.

In the last quarter, Dell lost its ranking as the world's No. 2 personal computer maker, a slot now held by Taiwan's Acer Inc. Dell rivals such as Acer and Hewlett-Packard Co. have stolen market share in part by exploiting their bigger presence in retail stores. That has been a big weapon because consumer interest in little laptops called "netbooks" has helped the PC industry start to pull out of its worst slump in years.

Instead, Dell gets 80 percent of its business from corporations, government agencies and other large institutions, which have remained hesitant to spend money on new technology.

Dell said yesterday that it is seeing improvement in some areas, but repeated its earlier prediction that a meaningful rebound in technology spending by businesses won't come until next year.

The company has said it is willing to lose some market share rather than lower prices.