Dell Cuts prices, Stock slides

Thursday, September 28th 2000, 12:00 am
By: News On 6

AUSTIN – Dell Computer Corp. announced Wednesday that it was slashing prices on some servers and personal computers because of low-priced computer parts.

While customers may have been celebrating smaller price tags, Dell investors showed displeasure on a day when tech stocks were down overall. Its shares on the Nasdaq hit a 52-week low midday before closing down $1.19, or 3.6 percent, at $32.44.

Dell said it was reducing prices on its PowerEdge servers 14 percent to 47 percent. The servers, computers used to host Web sites, now will sell for $1,199 to $13,000 or more.

It's typical for manufacturers to lower prices on existing products as new ones are about to emerge and as an attempt to leap over competitors, said Barry Jaruzelski, management consultant with Booz Allen & Hamilton in New York.

Also on Wednesday, the company cut prices 15 percent on Dimension desktop PCs and 12 percent on Inspiron notebooks for small businesses. The computers now begin at $599 and $1,099, respectively. The prices are good through Oct. 25.

"As Dell takes delivery of lower-priced components, we can immediately pass those savings on to our customers," said Frank Muehleman, vice president and general manager of Dell home and small business group.

Mr. Jaruzelski said the price cuts are an example of the success of Dell's direct model, which allows the company to build units as they are ordered.

Because of the falling computer parts prices and sustained sales, Dell is expected to meet yearly expectations of 30 percent growth over last fiscal year, when the company earned $25.2 billion.