Dell's Exploding Computer and Other Image Problems

[survivor999]

A Dell notebook computer that burst into flames last month in Osaka, Japan, has damaged more than just the conference table where it sat smoldering. The incident, publicized in photos on the Internet, has also hurt Dell's recent attempts to improve its image.

The company said the incident got more publicity than such incidents usually do when they happen to other manufacturers. In part, that is because Dell's reputation for responsive customer service was already under attack after the company, the world's largest PC manufacturer, started to cut costs at its call centers last year. Dell, reacting to the savaging it has received on blogs and Web sites over the cuts, recently responded with a program to spend more than $100 million to improve service.

Photos of the flaming and smoking notebook were posted on a technology news Web site called the Inquirer on June 21 (www.theinquirer.net/default.aspx?article =32550). The story was passed around to other Web sites and blogs like Consumerist.com. It was also the subject of a brief article carried later that day on the Dow Jones Newswires.

Two days later, Cindy Shaw, a securities analyst with Moors & Cabot, notified her clients about the publicity. Last Thursday, citing reports of a second smoking laptop, this one in Pennsylvania, she advised them that "should this story also hit the mainstream press, we believe there is headline risk and potentially negative demand ramifications for Dell."

Bob Pearson, vice president for corporate group communications at Dell, called Ms. Shaw's reaction "somewhat irresponsible."

Ms. Shaw said neither she nor her firm had made any financial bets that the company's stock would fall. She does, however, recommend that clients sell the shares.

So far, though, Dell's stock price has been largely unaffected.

More here: http://www.nytimes.com/2006/07/10/technology/10dell.html?pagewanted=print