Dell said to consider sale of factories

Dell said to consider sale of factories
By Rex Crum & Jeffry Bartash, MarketWatch
Last update: 12:41 p.m. EDT Sept. 5, 2008

SAN FRANCISCO (MarketWatch) -- Dell Inc. reportedly might sell its factories as part of a strategy to overhaul its production model to cut more than $3 billion in annual costs within the next two years.
The Wall Street Journal reported Friday that Dell could sell its factories within the next 18 months to contract manufacturers, most of which are based in lower-cost Asian countries. Dell has about 60 manufacturing or research facilities in 20 countries.
The sale of its factories would suggest Dell is still groping for ways to accomplish its goal of improved profits despite the return last year of founder Michael Dell to the role of chief executive.
Venancio Figueroa, a Dell spokesman, said the company wouldn't comment on "rumors and speculation." Figueroa repeated that Dell has said it wants to work more closely with manufacturers in order to "reduce costs and make products in a timely fashion."
Dell has made cutting costs and expanding into new markets part of its mantra since Michael Dell reclaimed his spot as the company's chief executive in January 2007 after being absent from that job since 2004.
And over the past year, Dell has launched a push into the retail sector in the U.S. and international markets, which has put its computers on the shelves at stores such as Best Buy Co. Inc.
Bill Fearnley, an analyst with FTN Midwest Securities, said selling its factories makes sense for Dell for several reasons, and also offers an incentive to potential plant buyers.

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