Dell has warned that price hikes for memory chips will hurt its fiscal third quarter results.
The PC maker said memory chip prices have increased by 25 per cent and has warned that the "pricing and availability situation" is "more difficult" than the effects of the recent earthquake in Taiwan on semiconductors.
Dell singled out the soaring prices for RAM and LCDs used in notebook computers and flatpanel screens.
Analysts polled by First Call had expected Dell to report earnings per share of $0.20 when results are published on 11 November.
Thomas Meredith, Dell's chief financial officer, said: "We are managing the memory situation carefully and are working to offset the cost increases with efficiencies in other parts of our business.
"We are also taking action to reduce overall memory consumption, including advertising system configuration with lower amounts of base memory."
He said the company expects the effects of the memory cost issue to be a short term matter, but one that would be felt on third quarter operating margins.
Despite the warnings, Meredith said through the first half of the current year, company revenue grew more than 40 per cent, double the industry's growth.
He added that current Dell customer demand is consistent with the growth pattern of the year's first half, and said the company's overall business and prospects for robust growth remain "quite strong".
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