Dell: From Subprime to Plant Closing?
Watching the subprime mess unfold is like watching a a crazy pin ball machine: You never know who or what is going to be hit next.
In this case, 900 jobs in Texas and 8,000 jobs world wide are on the chopping block. Dell is in trouble. One of the main reasons is its connection to CIT Group. CIT Group is deeply enmeshed in the subprime mess.
For 11 years, Dell has contracted with the CIT Group to provide its customers with loans to finance their Dell product purchases. About a tenth of Dell’s sales last year involved CIT Group in some way.
While Dell bought CIT’s share of the joint venture late last year, about $455 million of the current $2.1 billion Dell has lent to its customers was underwritten by CIT.