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Dell to say good bye to employees; cuts $3 Billion costs
By siliconindia
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Thursday, 18 September 2008, 16:35 IST
Bangalore: The economic slump has spared none and after Hewlett-Packard (HP) it's the arch rival Dell, which is planning huge job cuts to offset the recessional brunts. This Texas based multinational firm witnessed the lowest level of sales of computers in 10 years, while it tussles with the computer maker HP to scale up.
Dealing with the economic slowdown, as reported by Bloomberg, the company pledges to cut up to $3 billion in annual costs by eliminating employees and moving to lower-cost manufacturers. It expects to incur costs this quarter from revamping operations and job cuts. It is also shifting production away from Austin, Texas, and other U.S. locations. A similar step is already taken by HP, which saw a 4.1 percent decline, by cutting down its employee base by around 24, 600 people as it integrates the purchase of Electronic Data Systems.
The situation of the company is even witnessed by the venture firms. Raffaella Sommariva, a Fund Manager at AZ Fund Management SA in Luxembourg, which oversees the equivalent of $14.5 billion, said that The company, infact, witnessed a fall by $2.01, or 11 percent, to $15.98 in Nasdaq Stock Market trading. Moreover, the gross margin, or the percentage of sales left after production costs, amounted to 19.1 percent in its latest fiscal year, compared with 24.4 percent for Hewlett-Packard. The price was the lowest since April 1998. Explaining the slowdown, Chief Financial Officer Brian Gladden said, "Southern Europe has been relatively weak, China sales haven't bounced back as quickly as expected following the Summer Olympics, while orders from Thailand and Malaysia have been hurt by political instability."
This trend of loosening of the hold of the big corporations have led them to cut down on their technology budgets, with 40 percent of the firms globally slashing off the IT budgets, while others are delaying the projects and bargaining for lower computer prices.
As far as Dell is concerned, apart from its plans to cut down employees it has introduced seven new consumer products this year and will release 17 more in the second half. "By the end of the third quarter next year, Dell will have completely updated its product lines and will be manufacturing them all at lower cost, says Gladden.
