Dell plans to sell computer factories: report
Friday September 5, 3:12 am ET
(Reuters) - Dell Inc (NasdaqGS:DELL - News) is trying to sell computer
factories around the world in efforts to cut cost and improve
profitability, the Wall Street Journal said.
One person briefed on the plan told the Journal that he expects Dell
to sell most, possibly all, of its factories "within the next 18
months."
The most likely buyers of Dell's factories will be big contract
manufacturers, most of which are based in Asia, the paper said.
Dell's factories were originally tailored for a PC market that was
driven by corporate customers ordering large volumes of desktop PCs.
But over the past three years, growth has shifted to laptops sold to
consumers at retail stores. Round Rock, Texas-based Dell has lagged
behind competitors in coming up with a streamlined system to build
portable PCs.
Dell could face several obstacles in selling its plants. Contract
manufacturers may be hesitant to buy factories in places with high
labor costs, like the United States, a person with knowledge of the
talks told the Journal.
And some facilities could be encumbered by agreements with local
governments. Dell's North Carolina plant, for example, received
several million dollars of state and local tax incentives that are
contingent on the factory meeting certain employment and local-
investment goals by 2015.
Though Dell's plants are still regarded as efficient at churning out
desktop PCs, within the industry, company-owned factories aren't
considered the least expensive way to produce laptops.
Contract manufacturers can generally produce computers for less money
because their entire operations are narrowly focused on finding
efficiencies in manufacturing, as opposed to large firms like Dell,
which must balance marketing and other considerations.
No one was available at Dell for immediate comment.
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