Potentially BIG Cuts at Dell a Reality
When Corporate Profits mean more than employee relations, you can bet that stockholders are the ones that will be working the puppet strings. Even though the Computer Giant outsourced most operations over the years, including customer service for its purchasers, it seems as though that wasn’t enough to cork the hemorrhaging. Looks like more cuts are on the horizon.
Dell: Pulling Out the Pink Slips?
Efforts to streamline operations suggest a round of job cuts could be coming at the beleaguered PC maker
by Louise Lee
Technology
Is Dell (DELL) preparing for a significant round of layoffs? All indicators are signaling yes.
The struggling PC maker has not uttered the actual words “job cuts” or “reduction in workforce.” Just after he reassumed the CEO post on Jan. 31, founder Michael Dell did say that the company must “eliminate redundancies” as part of its turnaround. “We want to streamline how we do things,” explains Dell spokesman Bob Pearson. “We have not said anything about head count.” (See BusinessWeek.com, 3/2/07, “Dell’s Doubtful Turnaround”.)
Nagging Costs, Declining Sales
Dell, however, is reorganizing in a manner that consolidates several company areas, suggesting that pink slips may not be too far behind. The Round Rock (Tex.) computer maker is combining previously separate manufacturing, supply chain, and procurement operations into a single organization reporting to one executive. Dell also is creating a worldwide consumer business and a worldwide computer-services business, a change from the past practice of dividing up those units by country. Also, product design and development were parts of a separate unit reporting to the CEO; now they’re to be folded into Dell’s new worldwide consumer group (see BusinessWeek.com, 2/12/07, “Is Dell Too Big for Michael Dell?”).
Given Dell’s troubles, it’s unlikely the company will be able to redeploy workers it finds in redundant positions. In the preliminary results for the most recent fourth quarter ended Feb. 2, operating expenses, which include salaries, crept up to 11.6% of sales, from 9.6% a year ago. Making matters worse, Dell’s sales fell 5% from a year ago, to $14.4 billion.
Pearson wouldn’t comment when asked if Dell would redeploy workers if it cut jobs. “We don’t comment on hypothetical [situations].”
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