Dell to sell factories worldwide - report

 

Computer maker Dell, whose Irish subsidiaries employ more than 4,000 staff and account for close to 6 per cent of Ireland's gross national product, is seeking to sell all of its manufacturing plants worldwide and has approached contract computer manufacturers, the Wall Street Journalreported today.

The proposed factory sales, intended to cut costs, would mark a significant shift from Dell's long-standing strategy of making its own products, the Journal said.

A spokeswoman for Dell Ireland declined to comment on the report.

According to the report, Dell plans to have contract manufacturers make all its computers, the paper reported.

Dell, the world's second-biggest maker of personal computers, is seeking to raise profitability after reporting earnings that missed analysts' estimates as it cut prices to take market share from industry leader Hewlett-Packard.

Selling its production sites to focus on sales and marketing may aid efforts by the Round Rock, Texas-based company to expand its product range.

Dell would ensure that any contract manufacturer who purchased a factory would agree to make hardware for the company, according to the Journal report. Dell may sell all of its plants within 18 months, the newspaper said.

Jan O'Sullivan, Labour TD for Limerick East, said although they although the reports were of concern, "there must be grounds for optimism that the plant in Limerick will not be affected by any such plans".

"The plant in Limerick is regarded by Dell management as the jewel in the crown, particularly in terms of its cost effectiveness and levels of productivity," she said.

Dell reported a surprise 17 per cent decline in quarterly profit last week as the company suffered from tighter corporate spending in United States.

Net income for the fiscal second quarter ended August 1st fell to $616 million, or 31 cents per diluted share, from the restated year-ago net income of $746 million, or 33 cents per diluted share.

Additional reporting by Bloomberg