Dell to sell factories

The Wall Street Journal is reporting that Dell plans to sell its factories to cut costs.

According to the WSJ article, most if not all of Dell's factories could be sold or close within 18 months.

"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."

The WSJ points to a share price drop of more than 18 percent following Dell's "disappointing" quarterly results last week as a catalyst.

Companies are being lured with the prospect of supplying a greater slice of Dell's business.

OK, this looks like a sound business decision by Dell, but why would anyone would want to buy? It seems to me that the buyer(s), although getting a market, would be voluntarily putting themselves in a position whereby Dell could force the price of the units down, in much the same way that large supermarket chains squeeze their suppliers. Indeed Dell would need to do that to make the sale of the factories worthwhile and profitable in the long term. It's like voluntarily hanging a sign around your neck saying "Kick me".