Analyst: Dell Slashing Forecast For Notebook Shipments

Dell has slashed its notebook forecast for this year by as much as 20 percent, and Taiwan-based original design manufacturers (ODMs) say the vendor has been reducing its notebook orders, according to a report published Monday by CitiGroup analyst Richard Gardner.

Dell had originally forecast shipping 20 million notebooks in 2007, but now the Round Rock, Texas-based PC giant is projecting that it will ship 16 million laptops, Gardner said.

ODMs suggest that Dell has been reducing notebook orders in recent months. And Gardner said Dell's lowered projection of 16 million notebooks for this year tracks higher than CitiGroup's own forecast, according to Gardner.

He also wrote that one ODM is reporting that Dell is poised to significantly alter its manufacturing strategy.

"One vendor also indicated that Dell will begin several 'full system assembly' projects with ODMs in [the first calendar quarter of 2007], a departure from the company's historical practice of performing final notebook assembly in its own Penang facility," Gardner wrote. "We view this as a positive for Dell because it will reduce shipping and assembly costs."

Dell recently hired Michael Cannon, the former CEO of ODM Solectron, to take over its manufacturing operations and strongly suggested that a change in its assembly was in the offing.

A Dell spokesman didn't return a call for comment.

If the CitiGroup report bears out, it would indicate continued trouble for Dell in the PC and notebook space. During the fourth quarter, Hewlett-Packard grew its notebook shipments by 57 percent year over year. Dell's notebook shipments, by comparison, grew by 2 percent.

"Sources suggest that Hewlett-Packard's notebook shipment forecast remains steady at 19 million to 20 million units for calendar year 2007, generally in line with our current forecast of [20 million units]. This represents 30 percent [year-over-year] unit growth and suggests that HPQ expects to outgrow DELL again in notebooks during CY07," Garder wrote in the report.

Checks with ODMs also indicated that Apple is "a bright spot," and CitiGroup is forecasting Apple to ship between 2.6 million and 3 million MacBooks this year, in line or a little bit more than current forecasts. So far, MacBook Pro shipments have seen "modest" growth on a year-over-year basis, Gardner wrote.