Dell Inc. (NDAQ:DELL) shares fell over 13 percent today amid concerns that rising costs from a turnaround would destroy profitability for the computer-maker in future quarters. The company reported better-than-expected earnings growth of 8.5 percent in its third quarter, but said gross profit margins narrowed by 1.4 percent while operating expenses rose 24 percent.

Many analysts are now questioning if Dell's turnaround can succeed at all. It may take more than a year to build a worldwide retail network similar to HPs while it is likely to continue losing market share in the meantime. The company's direct-to-consumer business model has far too little share of the global market to succeed against larger competitors. The server market is also hurting with increased competition from Sun and others.

Dell may now be finding itself in a situation that it cannot fix. The company does not have a broader array of businesses than its competitors. The company no longer has cost advantages when it comes to ordering online or scalability. And it no longer the only computer manufacturer to offer computers online. There is clearly a plethora of issues facing the company that mere cost-cutting and restructuring cannot solve.

Dell's old business model was one that was built atop of a platform with a notoriously low barrier to entry while they focused on competiting on price. That's a battle that very few companies can win. These factors make DELL and interesting stock to watch as investors have very little hope for the company now...

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