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Dell also hit by quake

ZDNN ZDNet.co.uk

Published: 19 Oct 1999 08:19 BST

Last month's earthquake in Taiwan has claimed another victim: Dell Computer.

The direct computer manufacturer Monday said a recent 25 percent spike in prices for computer memory chip components it uses to build personal computers were likely to hurt results for the company's third quarter, ending later this month.

Dell is the latest major US computer maker to feel the effects of the quake which devastated industrial production in Taiwan. Compaq Computer cautioned earlier this month that it expects spot delays in some consumer personal computer lines. However, the computer maker's admission comes just two weeks after company chairman Michael Dell told analysts his company's financial performance would not be impacted by the natural disaster.

Thomas Meredith, the company's chief financial officer, said in a statement that the effects of the industry-wide memory-cost increase would be a short term matter, but added that Dell's third quarter operating margins would be hurt. The company did not comment on how or whether the pressure on profit margins might translate into lower earnings per share.

But Dell, the world's second largest personal computer maker behind Compaq , stressed that demand for its products is "extremely strong and continues to outpace the computer-systems industry, and that overall availability of components has improved."