Dell may put computer plants on the block to raise profits
Dell may sell its manufacturing plants worldwide and has approached contract computer manufacturers, the Wall Street Journal reported on Friday.
By Bloomberg |
HONG KONG: Dell may sell its manufacturing plants worldwide and has approached contract computer manufacturers, the Wall Street Journal reported on Friday, citing people familiar with the matter. The proposed sales, intended to slash costs, mark a shift from Dell���s strategy of making its own products, the Journal said. Instead, Dell plans to have contract manufacturers make all its computers, the paper reported.
Dell, the world���s second-biggest maker of personal computers, aims to raise profitability after reporting earnings that missed analysts��� estimates as it cut prices to take market share from industry leader Hewlett-Packard. Selling factories to focus on sales and marketing may aid efforts by the company to expand its product range. Dell rose 0.9% to the equivalent of $20.54 at 12:55 pm in Frankfurt trading. Before Friday, the stock had fallen 17% this year versus an 18% drop for the S&P 500 Information Technology Index.
Dell would ensure that any contract manufacturer who purchased a factory would agree to make hardware for the company, according to the Journal report. Hon Hai Precision Industry, Compal Electronics and Quanta Computer are among the contract manufacturers that make parts or notebook computers for Dell.
Dell owns manufacturing and distribution facilities in Texas, Tennessee, North Carolina, Florida, Ohio, Ireland, India, China, Brazil, Malaysia and Lodz, Poland, where it opened a plant last year, according to a regulatory filing. Dell may sell the plants within 18 months, the Journal reported.
Last month, Dell introduced new notebooks with longer battery life aimed at business users. The company also started selling a slimmer laptop weighing 1 kg after Hewlett-Packard offered a similar model in June.
Dell has forged agreements to sell its computers through retailers including Wal-Mart Stores in the US, Gome Electrical Appliance Holdings in China, Carrefour in Europe, Bic Camera in Japan, and the Croma chain of electronics stores of India���s Tata group. TR Reid, a Singapore-based Dell spokesman for Asia Pacific and Japan, declined to comment on the report, citing company policy not to comment on speculation.
���We have said repeatedly there are opportunities to use third-party manufacturers to reduce costs and increase efficiency,��� Reid said. Determining ���how best to do that is something that is in process now���. Dell increased PC shipments 21% in the quarter ended June 30, compared with Hewlett-Packard���s 17%, and 15% for the market overall, according to research company IDC.
The second-ranked PC maker cut prices by an average of 7% in the three months ended August 1, as competition intensified, it said in a regulatory filing on Thursday. Hon Hai hasn���t had any discussions with Dell on buying the plants, Edmund Ding, a spokesman for the company, said.
Dell, the world���s second-biggest maker of personal computers, aims to raise profitability after reporting earnings that missed analysts��� estimates as it cut prices to take market share from industry leader Hewlett-Packard. Selling factories to focus on sales and marketing may aid efforts by the company to expand its product range. Dell rose 0.9% to the equivalent of $20.54 at 12:55 pm in Frankfurt trading. Before Friday, the stock had fallen 17% this year versus an 18% drop for the S&P 500 Information Technology Index.
Dell would ensure that any contract manufacturer who purchased a factory would agree to make hardware for the company, according to the Journal report. Hon Hai Precision Industry, Compal Electronics and Quanta Computer are among the contract manufacturers that make parts or notebook computers for Dell.
Dell owns manufacturing and distribution facilities in Texas, Tennessee, North Carolina, Florida, Ohio, Ireland, India, China, Brazil, Malaysia and Lodz, Poland, where it opened a plant last year, according to a regulatory filing. Dell may sell the plants within 18 months, the Journal reported.
Last month, Dell introduced new notebooks with longer battery life aimed at business users. The company also started selling a slimmer laptop weighing 1 kg after Hewlett-Packard offered a similar model in June.
Dell has forged agreements to sell its computers through retailers including Wal-Mart Stores in the US, Gome Electrical Appliance Holdings in China, Carrefour in Europe, Bic Camera in Japan, and the Croma chain of electronics stores of India���s Tata group. TR Reid, a Singapore-based Dell spokesman for Asia Pacific and Japan, declined to comment on the report, citing company policy not to comment on speculation.
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���We have said repeatedly there are opportunities to use third-party manufacturers to reduce costs and increase efficiency,��� Reid said. Determining ���how best to do that is something that is in process now���. Dell increased PC shipments 21% in the quarter ended June 30, compared with Hewlett-Packard���s 17%, and 15% for the market overall, according to research company IDC.
The second-ranked PC maker cut prices by an average of 7% in the three months ended August 1, as competition intensified, it said in a regulatory filing on Thursday. Hon Hai hasn���t had any discussions with Dell on buying the plants, Edmund Ding, a spokesman for the company, said.
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