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Wed, Jan 07, 2009 - 04:22 PM EST  —  AAPL: 90.991 (-2.029, -2.18%)  |  NASDAQ: 1599.06 (-53.32, -3.23%)

Beleaguered Dell puts box assembly factories up for sale worldwide in effort to slash costs
Friday, September 05, 2008 - 10:25 AM EST

Beleaguered Windows PC box assembler Dell "is trying to sell its computer factories around the world, a move to sharply overhaul a production model that was long a hallmark of the PC giant's strategy but is no longer competitive," Justin Scheck reports for The Wall Street Journal.

"In recent months, according to people familiar with the matter, Dell has approached contract computer manufacturers with offers to sell the plants. One person briefed on the plan said he expects the company to sell most -- and possibly all -- of its factories 'within the next 18 months.' Other factories could close, this person said. Dell would enter into agreements with the contract manufacturers to produce its PCs," Scheck reports.

"The Round Rock, Texas, company last week reported disappointing quarterly profit that helped send shares down more than 18%, and has been trying to reduce expenses since early last year," Scheck reports.

"Dell could face several obstacles to selling its plants. Contract manufacturers may be hesitant to buy factories in places with high labor costs, like the U.S., said one person with knowledge of the talks. 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," Scheck reports.

Full article here.

[Thanks to MacDailyNews Readers "Luis E." and "John M." for the heads up.]


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Sep 05, 08 - 09:30 am Comment from: pastrychef

When this happens, Dell will officially be nothing but another box maker. Hopefully, they'll die the same way the others have as well.

Sep 05, 08 - 09:31 am Comment from: Mac Convert of Two Years

Perhaps Apple and Foxconn should buy Dell's factories - on the condition that the money be distributed to Dell shareholders.

Sep 05, 08 - 09:32 am Comment from: jarrettdailynews

Quit waiting for the tipping point, because Apple is definately pouring out of the kettle now. One shoots up and everyone else levels off, or goes broke. Amazing.

Sep 05, 08 - 09:38 am Comment from: MidWest Mac

Maybe Apple could buy one of these factories to make the butt load of multi-touch devices that will be flooding the market by 2010.

But it would irk that component-whore Michael Dell to cash a check signed by Steve Jobs (but we all know he'd cash it).

Sep 05, 08 - 09:40 am Comment from: Macromancer

Sell ---> Cash ---> Shrareholders

Sep 05, 08 - 09:49 am Comment from: montex

Thanks to Dell, it's Schradenfreude Friday!

C'mere Michael. I want to taste those tears of yours.

Sep 05, 08 - 09:58 am Comment from: Raymond in DC

Dell's deal with North Carolina involved concessions worth a lot more than a 'few million" dollars. Sounds like Michael owes the people of NC a lot of money.

Indeed, it would be nice to be present as the Dell logo was removed and the Apple logo went up on that facility. Unfortunately, Apple is too wedded to the high margins that come with production in China.

Sep 05, 08 - 09:59 am Comment from: Mr. Reeee

Who cares.

Dell is not much different from Staples or those companies that print your corporate logo on pens and mouse pads. Some other company will emerge to take Dell's place in the world of commodity office tools.

Dell is DEAD.

Sep 05, 08 - 10:00 am Comment from: John

Interesting you don't hear a word out of Mr. Dell. He was a real BIG MOUTH before with his wise cracks about how Steve Jobs should put Apple out of business, that they have nothing left.

Looks like Mr. Dell should put his foot in his BIG MOUTH NOW!!!!
How does that shoe taste Michael? wink

And you can blame Microsoft and Windows Vista as the big failure to add to your failure. Of course you can't leave OSX out either.

Sep 05, 08 - 10:08 am Comment from: SirROM

@John

"Looks like Mr. Dell should put his foot in his BIG MOUTH NOW!!!!
How does that shoe taste Michael?"

I wonder if he's tasting the new shoes that Bill Gates is wearing courtesy of Jerry Sienfeld?

Sep 05, 08 - 10:11 am Comment from: Alec

You have to admit, though, it is very sad to see that all of those jobs once again will be outsourced to China and American workers will be heading for the unemployment line. We can't go on like this forever.

Sep 05, 08 - 10:13 am Comment from: Jake

Sad to lose those American jobs, though. Oh, well. Seems inevitable that cheap manufacturing is all sailing for China...

Sep 05, 08 - 10:14 am Comment from: @Alec

You beat me to it!!

Sep 05, 08 - 10:15 am Comment from: Keith

It's sad. The Dell plant in NC is less than a mile from my in-law's house. It's huge. It also has lots of grass growing in it's equally huge parking lot.

Sep 05, 08 - 10:16 am Comment from: someone

{...

shareholders = [Dell closeDown];

[pool drain];
return 0;
}

MDN Word "face", as in "in your...!" *snicker*

Sep 05, 08 - 10:18 am Comment from: ron

jarrettdailynews. "Apple is definately pouring out of the kettle now."

Yes, they definitely are. It's a finite thing.

Sep 05, 08 - 10:21 am Comment from: Jamie

What about selling Dell and giving the money back to the shareholders Michael?

tongue laugh

Karma is a bitch!

Sep 05, 08 - 10:22 am Comment from: MacintoshSoftwareList.com

Goodbye Gateway, I mean Dell !

Sep 05, 08 - 10:23 am Comment from: Paul Zune's Meathammer

MDN, is your memory so short? They're going into the music biz again, remember? Who needs all those factories with the killer stratey they are mulling over.

Sep 05, 08 - 10:26 am Comment from: Me

How many computers do Apple assemble in the US?

Sep 05, 08 - 10:29 am Comment from: Macaday

It a bad, a really really bad time to be selling assets like this.

Poor Dell.

Sep 05, 08 - 10:30 am Comment from: Macaday

Aha. I know why they chose to dispose them at such a terrible time...

...advice from their most trusted adviser: Rob Enderle.

Sep 05, 08 - 10:31 am Comment from: @John

That shoe in Michael Dell's mouth... it isn't a size 10 is it?!

Sep 05, 08 - 10:32 am Comment from: Arnold Ziffel

I don't know how many computers Apple assembles in the US, but our two year old Mac Pro was made in CA.

Sep 05, 08 - 10:33 am Comment from: Dell Makes Nothing of Value

The slap sh*t together made by others or resell the work of others. How is that manufacturing? Sounds like a middleman to me.
Eff 'em.

Sep 05, 08 - 10:36 am Comment from: HMCIV

@John

"How does that shoe taste Michael?"


I'm guessing it tastes like crow.

Sep 05, 08 - 10:37 am Comment from: Jeff

Chapter 11 anyone......

Sep 05, 08 - 10:43 am Comment from: sinclap

Vista out sells OSX by 20-1.

Seems that Dell is getting their operations in order. Also, in the last week, Dell has stuffed Best Buy locations with laptops and desktops. Dell already has cut into HP's business and most likely cause aapl sales declines to. Customers can compare aapl offerings to others now.

Also, Dell has a broader product line than aapl with more choices. Where is the 15' and 17' MacBooks? Also, the XPS 630 gaming rig is on display reminded me of my PM G4 days.

I would not under estimate Michael Dell.

Sep 05, 08 - 10:58 am Comment from: @sinclap

Is it actually POSSIBLE to underestimate Michael Dell?

Sep 05, 08 - 11:00 am Comment from: Q

@sinclap:
1. We don't know where the 15" MacBooks is either.
2. Ford outsells BMW 20:1.
3. Apple NEVER underestimates competitors, it just builds better products.
4. You can't spell and don't know basic rules of grammar.

Sep 05, 08 - 11:04 am Comment from: Jubei

Someone needs to ask Mr. Dell what he thinks Apple should be doing now.

Sep 05, 08 - 11:20 am Comment from: Nick Fury

By this time next year Dell will be selling QVC knockoffs and timeshare vacations in Boca.

Sep 05, 08 - 11:28 am Comment from: freebeer

Even in worse times and conflicts, you would never hear Jobs or Eric Schmit bad mouth other companies and CEOs, like Dell and Ballmer would when they were all cocky and gun-ho. That's the difference in fundamental leadership and focus on creating innovation for your customers and not waste time on your competitors.

Jobs is right all along: They have no taste, and they have no class.

Sep 05, 08 - 11:28 am Comment from: sinclap

Q: aapl's quality control on the mac's has slipped. The iMac's have been the most unreliable.

aapl is quietly repairing the problem plague iMac G5 1.8, including mine. That model is a lemon. Thank god for aapl care. Three mother board swaps, 2 Power supply, HD and BT module replacements.

The glossy screens on the 20' iMac models suck, unworthy for a premium priced product.

Lets face it, aapl's focus is on the iPod/iPhone bsuiness and that the Mac division has been neglected. Sony and Dell are pushing the envelope on cpu product design.

Sep 05, 08 - 11:56 am Comment from: HCE

This blind Apple fanboyism is too much to take.

If you look at it logically, all Dell is doing is what Apple did years ago - moving completely away from assembling things themselves and to contract manufacturing in China. It isn't any kind of victory for Apple, if Dell is doing what they themselves did years ago.

In this case it means that plenty of jobs will be lost - including American jobs in North Carolina - eroding manufacturing in this country even more. State subsidies or otherwise, Dell was doing something Apple was not - supporting manufacturing jobs in the US.

Much as I love seeing the egg on Michael Dell's face, I don't get any schadenfreude from this news.

- HCE

Sep 05, 08 - 12:17 pm Comment from: madgunde

The really sad thing is, quality of Dell PCs might actually improve a little!

Sep 05, 08 - 12:22 pm Comment from: iDon't

I'm sad because I live in Austin TX which is next door to Round Rock TX. I see Dell buildings everywhere I go. And tons of people work for Dell around here.

I want to see jobs keep in the USA. Steve should let Michael use OSX because eventually Dell is going to push Linux more. The only reason I like Dell is because they do manufacture in the USA. The only reason I dislike Apple is because they don't manufacture in the USA.

DAMN!!! We have many poor depressed places in the USA that could use those jobs.

Sep 05, 08 - 12:43 pm Comment from: wjw1

what if... Apple not only pwned Dell, but actually... owned Dell.

Then, all their ads would change from "Dell recommends Vista" to "Dell recommends you get the hell out of the past and move into the current century - think different or die"

Would Michael D. just drop dead where he stood?

Would MSFT FINALLY see the writing on the wall in losing another "business partner?"

Sep 05, 08 - 12:45 pm Comment from: @iDon't

You are somewhat wrong, Apple actually produces its Mac Pro's and Xserves in the U.S., along with a good amount of iMacs. Check your sources before you post. Thanks.

Sep 05, 08 - 12:47 pm Comment from: sinclap

My iMac is made in China, which has been so problem plagued.

My Dell Inspiron 530 Q6600 has been rock solid. Inside the plain vanilla box is grade A components with a real Nvidia 8600 GPU for $820 with two year warranty.

Quadcore performance for under $1000.

Sep 05, 08 - 12:50 pm Comment from: sinclap

wjw1...

Are you kidding. Michael Dell wants to license Snow Leopard.

a universal version of Snow Leopard for $249 per retail copy would drive OS market share.

Sep 05, 08 - 01:22 pm Comment from: Passerby

"Vista out sells OSX by 20-1."

Not possible. If OSX has, for example, 2% of the world sales, that would mean Vista has 80% of the world market, leaving 18% for XP, all flavours of Unix and Linux and all other commercial operating systems. We only have to allow OS X a 4.77% share of sales and OS X and Vista alone total more than 100% of the total market—no XP, no Unix, no Linux.

I'm sure Vista outsells OS X. Why are people compelled to make such flimsy lies about it?

Sep 05, 08 - 01:28 pm Comment from: Passerby

The only way I can see Dell selling the factories and then buying computers from those same factories cheaper than they are currently making them as owners is for the new owners to slash costs drastically. About the only cost that can be cut that deeply for existing plant is labour. That would not make Dell popular with the state.

Any new owner is not likely to get the same deals Dell got from the state. Their costs will be higher.

I just can't see how this is supposed to work.

Sep 05, 08 - 01:29 pm Comment from: walk away Bill just walk away

Beleaguered !!!!!! Windows PC box assembler Dell. Beleaguered !!!!!! Beleaguered !!!!!! Beleaguered !!!!!! Looks good on someone else for once.

Sep 05, 08 - 02:06 pm Comment from: bluemarlin1402

While I support US manufacturing jobs, I don't know if I'd call assembling dull, grey dell boxes manufacturing. There's a reason why these types of jobs can be sent to China; because they are menial, low skilled jobs.

If I where a parent, I'd wish for more for my children.

Sep 05, 08 - 02:32 pm Comment from: sinclap

Beleaguered? Not in Dell's case. Dell is making money. The firm created over a billion in cash last quarter to be used for stock buy back.

When is aapl going to make better cpu hardware?

Sep 05, 08 - 02:47 pm Comment from: iLuvMyMacs

LOOHTL
(Last one out, hit the lights)



Unfortunately- People's jobs are at stake- and that's no joke.

Sep 05, 08 - 03:25 pm Comment from: Digits McGee

P&G;, along with many others, has been divesting factories and even divisions for years now. All big brand owners are doing this. Outsourcing is no surprise. But since Dell brought nothing to the box biz besides their now well-copied system, divestiture only curtails losses.

Sep 05, 08 - 04:21 pm Comment from: iDon't

To @iDon't

I don't have to check my facts before I post. I'm not a reporter. I'm just a UNIX nerd that never leaves home and watches porn all day. Blow me!!!

Sep 05, 08 - 05:15 pm Comment from: Anonymous©

Dell got promised something like $240M in subsidies from North Carolina, over the next 20 years. I hope there are clawback provisions in their agreement.

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