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Dell pushes up Q1 estimates

Pushes down costs

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Dell has revised its sales guidance upwards, or rather less downwards, for Q1. The PC giant now expects revenues to come in at $7.9bn, 2 per cent less than the previous quarter. On February 16, the company forecast lower sales of 3 to 5 per cent.

Dell reckons that it profited from falling component prices last year more than its rivals. Manufacturing efficiencies and just-in-time ordering meant that the company could pass on cost cuts more quickly, and in turn gain more market share.

The company does not have this advantage when component prices are rising - the component prices for desktop PCs have increased 11 per cent and notebooks by 15 per cent so far this year, according to unnamed analysts cited by Dell. Presumably, Dell will have to pass on price rises more quickly than competitors which hold inventory.

However, Dell has a different story to tell the analysts (it's meeting them today). In a statement
Kevin Rollins, Dell's president and COO, says:

"We've stepped up our pursuit of internal cost reductions through still-higher levels of quality and efficiency. The total opportunity to lower costs - in areas such as product design, warranty expenses, manufacturing and call-center management - is even greater this year than last."

Scary. ®

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