Joe Ann Stahel slips in a Southern expression for frog hunting to describe today's computer retail market.

"It's like putting three tomcats in a croaker bag and letting them fight it out," said Stahel, who keeps tabs on the fight between computer stores from her Dallas office of Storeboard, a market research company.

Despite strong sales in 1987, retailers complain that the squeeze on profit margins is worse than ever in the personal computer industry's 10-year history.

"Margins were pitiful in the fourth quarter because of heavy discounting," Stahel said.

Making a buck selling personal computers has never been easy. During the industry's slump in 1984, retailers groused that a slide in the economy stifled consumer and business computer buying. Other culprits included sharp price discounting, a glut of products and a nonstop stream of new competitors.

While those pressures remain intense, margins are being eroded further by a steep rise in overhead costs for training personnel, advertising and financing inventory.

Skinny margins are convincing store owners that a long-expected division among retailers is coming at last. Some are likely to sell computers at cut-rate prices, but with no service. The rest will charge more but help customers.

A consumer will be forced to choose between buying a cheaper computer or paying more but knowing somebody at the store will help unravel the machine's mysteries.

Sales remain brisk today despite the October stock market collapse. December sales improved 20 percent to 25 percent over a year ago, and strong gains are predicted for this quarter. But retailers are scraping for every cent of profit.

Bob Moore, owner of four Computerland stores in Hawaii, is watching an order for $3 million International Business Machines Corp. personal computers from the state of Hawaii, a regular customer, slip through his fingers.

Moore offered to sell the state the new IBM PS-2 Model 60 for $2,400 each, or 34 percent off the $3,595 list price. Because IBM sells the Model 60 to Moore and other high-volume retailers for 40 percent off the list price, Moore still could make a $243 gross profit on each Model 60 he sold to Hawaii.

But a competitor, San Francisco-based Photo & Sound Inc., was willing to lose money to win the bid. Photo & Sound's price was $2,153 -- $3 below its own 40 percent discounted price.

Doug Michael, the president and chief executive officer of Photo & Sound, said the move was necessary and strategic.

"On that particular model, there's very, very severe competition with other manufacturers," Michael said. "We had to get down in that price range to win the business back for IBM."

Retailers, particularly independent stores, don't like manufacturers' practice of giving the higher-volume dealers bigger discounts than others. Equally irksome is the computer makers' relentless pressure on retailers to sell more and more goods.

"While sales are good, I'm not sure how profitable the stores will be," said Vic Leventhal, senior marketing vice president of Oakland, Calif.-based Computerland Corp., which has 800 franchised stores worldwide. "The major manufacturers talk value-added, value-added, but what they want is volume, volume, volume."

The quandary is illustrated by a situation at one Silicon Valley computer store, whose owners requested anonymity to protect their relationship with a supplier.

The store sells Hewlett-Packard Co.'s popular LaserJet printer for $1,699. In three years, that printer has gone from a profit maker to a loss leader.

Recently, the manufacturer notified the store that it would have to buy $300,000 more in laser printer inventory or see its 39 percent volume discount cut to 36 percent. At the new level, the store's gross profit (difference between the wholesale and retail price, excluding the overhead costs) on an H-P LaserJet printer would slip from its current $107 to $39. At that price, the store loses money on each sale.

"I'll have to stop selling them," said one of the store's partners.

To survive, retailers continually must shift to more profitable computers and rely on sales of roll-top desks and various computer accessories. Others just keep looking for ways to cut costs or aggressively chase new business.

"There's the potential to make more money on other things than computers themselves," said Bill Lempesis, an industry analyst at Dataquest Inc. of San Jose, Calif. "The amount of equipment you have to move to make money is getting greater all the time and becoming more and more of a problem."

Len Farace, owner of Computers & Accessorys of Campbell, Calif., has watched his gross profit margin on personal computers slip in three years from 30 percent to 12 percent as they have evolved into commodities.

His sales have quadrupled in that time, and his store has been enlarged, but he's held his employee count steady at 11 to help stay ahead of the game.

At Data Source Computer Centers, an eight-store chain based in Campbell, the sales staff visits prospective customers at their businesses, rather than wait for them to walk into the store.

This strategy is common. According to Dataquest, 60 percent to 80 percent of all computer retail store sales are now made outside the store.

"We started out like everyone else discounting, selling lots of boxes, but you can't build a long-term business like that," said Gary Childress, Data Source's marketing vice president. "When we saw a lot of retailers going bankrupt, it made us realize that we can't stay just in consumer retailing."

Data Source, which had counted on walk-in retail business for 90 percent of its sales two years ago, expects retail trade to account for only 30 percent of its sales today.

In addition, Data Source, like many other retailers, depends on training sessions to bring in extra cash. Two years ago, the chain offered a total of six seminars. In 1987, each store held two or three classes a month.

Each class attracted 15 to 20 people, who pay $75 for a four-hour class on subjects such as desk-top publishing and use of accounting spreadsheets.

Intense pressure on profit margins also has encouraged another cost-conscious trend -- growth in the number of retailers who sell computers from sales offices, instead of stores.

Howard Furer, an analyst at Infocorp, a Cupertino, Calif., market researcher, estimates that nearly 1,000 computer sales offices have sprung up nationwide in the past 18 months.

"It's a logical extension of the out-bound sales force," Furer said. The sales offices "have been selling {computers} in meaningful quantities."

Industry watchers speculate that IBM will encourage the trend by letting resellers swap storefront dealerships for sales office dealerships to help cut overhead.

While they watch their profits slip away, big and small retailers are urging manufacturers to do more to ease their stress, including eliminating tiered discounts. Computerland's Leventhal, for example, suggests that manufacturers dedicate sales territories to certain dealers and pay stores to conduct seminars and training.

Computer & Accessorys' Farace suggests swapping favors with computer makers. A manufacturer, for example, might give one retailer the steepest discounts and priority shipment of his products. In return, the retailer would carry only that manufacturer's products.