SAN FRANCISCO (Reuters) -- Dell Inc (DELL.O) shares tumbled as much as 15 percent on Friday on concern that rising costs from a turnaround at the No. 2 personal computer maker would crimp profitability in future quarters. The shares were down $3.66, or 13 percent, at $24.48 in midday trading on Nasdaq after falling as low as $23.92 earlier in the session. On Thursday, Dell reported better-than-expected revenue growth of 8.5 percent in its fiscal third quarter. But it said gross profit margins narrowed by 1.4 percentage points from the second quarter, and operating expenses rose 24 percent. The company said costs from job cuts, investments in the business and acquisitions ""may adversely impact the company's performance,"" while near-term results ""could be negatively impacted"" as it sells more lower-profit computers in the fourth quarter. ""Although our thesis on Dell as a turnaround is intact, the timeline is not and the uncertainty is higher,"" Goldman Sachs analyst Laura Conigliaro, who has a ""buy"" rating on Dell, said in an investor note. Goldman Sachs on Friday removed Dell from its ""conviction list"" of preferred stocks and added rival Hewlett-Packard Co (HPQ.N), the No. 1 PC maker. Shares of HP rose as much as 1.4 percent but were off 1 cent at $51.04 in midday trade on the New York Stock Exchange. ""Dell's results were clearly mixed, as better-than-expected revenues were met by a profit shortfall owing to gross margin compression and continued escalation in operating expenses,"" Bear Stearns analyst Andrew Neff wrote in an investor note in which he lowered 2008 earnings estimates for Dell. Neff added, however, that ""the key issue is that things don't improve overnight as an early-stage turnaround, and it's unfair to compare Dell with HP, which arguably spoiled investors with its generally flawless turnaround."" Neff has an ""outperform"" rating on Dell. Dell, based in Round Rock, Texas, has been changing its business model under founder and Chief Executive Michael Dell, who retook the CEO position in January after the company repeatedly missed analysts' earnings forecasts under his predecessor. In May Dell announced a 10 percent staff reduction, and in June it started selling PCs through Wal-Mart Stores Inc (WMT.N), the first of a string of retail partners as Dell breaks from its direct-only sales model, pioneered by Michael Dell in 1984.