Dell Computer Negotiates Pacts to Allow Price Hikes if Costs Rise

Dell Computer Corp. has renegotiated contracts with its customers enabling the PC maker to raise the prices of its computers if its costs for components rise, Vice Chairman Jim Vanderslice said Tuesday.

He also said revenue and component supplies were coming in as expected in the current second quarter at the world’s No. 2 personal computer maker.

“Our business is right in line, both top line and supply line,” he said in an interview after his presentation at a Bear Stearns Technology conference. “We’re not seeing the component supplies shortages we were worried about.”

Earlier, Michael Dell, chairman, chief executive and founder of the company, predicted record revenue for the year.

Dell builds computers to order, requiring tight parts-inventory management, and watches closely for shortages of components such as dynamic random access memory chips used in personal computers. DRAM prices have recently risen due to a tightening supply in components markets.

Bear Stearns analyst Andrew Neff said that the new contract terms were significant as the computer maker will be less likely to be caught short by rising components prices.

“This is very significant for Dell because it reduces that exposure to rising components prices,” he said. “Now they can raise the prices if components prices go up. It’s just like an airline that will raise ticket prices if the price of fuel is higher.”