Dell announces that it will be cutting staff from Dell locations around the world. Wire service reports says cuts will include its North Carolina plant. The PC maker saw its revenue drop by 16 percent in the fourth quarter, to $13.4 billion, and Dell executives previously said they were looking to cut costs.
Dell
began laying off employees March 11 in an effort to reduce costs at a time when
global PC sales have plummeted due to a sour worldwide economy, especially in
the United States,
where Dell has always been a strong contender. The news comes two weeks after
the company announced dismal fourth-quarter earnings.
According to the Associated Press,
cuts were being made at the Dell plant in North Carolina,
which opened in 2005. The PC maker had once planned to create some 1,500 local
jobs at the location; it was unclear how many of jobs there would be lost.
Dell executives had also mentioned that the company still had $9 billion in
its coffers.
However, despite the cash on hand, the company has undergone belt-tightening
with regard to employees over the past year-a fact commented upon during the
March 11 announcement of layoffs.
"Today's actions are consistent with the streamlining that has been
underway in our business for more than a year as part of our ongoing initiative
to remain competitive by enhancing our efficiency and underlying cost
structure," Jess Blackburn, a spokesperson for Dell, said in an e-mail.
While not commenting on the exact number of staff reductions, or in what
areas of Dell they would happen, Blackburn added,
"We are sensitive that the reduction is significant for affected and other
employees, and are working to minimize consequences. Affected employees will be
offered competitive severance packages, including career counseling and
outplacement services."
In March 2008, Dell
announced that its goal of saving money would be reached by reducing its global
payroll by 8,800 employees.
Analysts see Dell's cost-cutting moves as part of the company's master plan
to strengthen its position and future potential.
"We believe that, despite its focus on profitability and its move
toward the high end of the market, where it can bundle its servers with
software and services, Dell still has an eye toward growth," John Spooner,
an analyst with TBR, said in a Feb. 26 research note. "We expect it will
utilize its cost-reductions to once again drive high levels of unit shipment
growth and gain market share as soon as is viable."
However, the research note said, "Dell's large amount of in-house manufacturing,
its exposure to the enterprise market and its lack of an indirect channel
presence relative to competitors such as Hewlett-Packard are all working
against it."
Spooner added in a March 12 interview: "I expect they're going to cut a couple thousand
more jobs this year as they adjust their manufacturing." Editor's note: This story has been updated with comments from an analyst.
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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