Dell layoffs could exceed original expectations

Part of a $3B cost-cutting plan

Dell Inc. CEO Michael Dell today reaffirmed plans to reduce the company's head count by 8,800, but he also said the layoffs may exceed that number in an effort to further cut costs.

Dell said the company plans to cut "at least" 8,800 jobs and stated that "we may go past that number." The company had cut its head count by 3,200 by the end of fiscal 2008, which ended Feb. 28.

A Dell spokesman declined to provide a new staff-reduction guidance beyond 8,800, stating that number was the goal for now. At the end of fiscal 2008, the company employed around 88,200 employees.

The layoffs are part of a cost-cutting plan that will save more than $3 billion over the next three years.

Earlier this week, Dell said it would cut 900 jobs after shutting down a desktop assembly plant in Austin. The margins are low in the desktop PC business, and the company is realigning its North American operations to make it more efficient, a Dell executive said yesterday.

Dell is taking additional steps to cut costs, including reducing compensation, restructuring its product design and distribution, and realigning its manufacturing strategy by shutting down some factories while opening new operations in emerging markets.

The company has opened factories in low-cost manufacturing countries such as Poland, Brazil and India to meet the growing needs in emerging markets, while looking to realign its North American assembly operations. Dell is willing to shift computer assembly to partners to reduce costs and boost margins.

The company is also cutting expenses by targeting products at specific design segments and price points, rather than offering a generic base on which to build PCs for all segments and price points.

Copyright © 2008 IDG Communications, Inc.

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