DELL TO LAYOFF 8,000 EMPLOYEES

[Anonymous]

Dell Announces Lower Profit, Job Cuts
DALLAS
(June07) – Dell  Inc. beat Wall Street predictions in its first-quarter
earnings report but said it would eliminate 10 percent of its work
force over the next year as part of a broad plan to trim costs and
become more competitive with rivals.The computer maker said it earned
$759 million, or 34 cents per share, in the three months ended May 4,
down slightly from $762 million, or 33 cents per share, in the year-ago
period. Sales rose nearly 1 percent to $14.6 billion.The results beat
analysts’ predicted earnings of 26 cents per share on sales $13.95
billion, according to a poll by Thomson Financial.Investors also seemed
pleased, as shares rose $1.58, or 5.9 percent, to $28.49 in extended
trading. Before the preliminary report was released Thursday afternoon,
Dell shares gained 69 cents to $26.91. The stock has traded in a
52-week range of $18.95 to $27.89.Since returning in January to lead
the company he founded, Michael Dell  has overseen a shake up of his
top executive ranks and made numerous other changes to improve customer
service and reclaim market share.

In the earnings release, the
company said it was reviewing costs across the board and that the job
cuts – equal to more than 8,000 of Dell’s more than 81,000 full- and
part-time employees – would vary across geographic regions and customer
segments to “reflect business considerations as well as local legal
requirements.””While reductions in head count are always difficult for
a company, we know these actions are critical to our ability to deliver
unprecedented value to our customers now and in the future,” Michael
Dell said in a statement.Barry Jaruzelski, management consultant at
Booz Allen Hamilton, was among the analysts who said it appeared
Michael Dell was finally making a fresh stamp with by taking some bold
steps to fix problems.Round Rock-based Dell has continued to struggle
to regain market share after Hewlett-Packard  Co. ousted it from the
top spot in worldwide computer shipments last year. In the first
quarter, HP kept its lead over Dell with about 4 percent more
shipments, according to tech research firms IDC and Gartner Inc.Besides
layoffs, Dell earlier in May broke from its long-standing
direct-to-customer business model with a plan to sell computers through
Wal-Mart Stores  Inc., the world’s largest retailer, beginning June 10.
And Dell also recently began selling consumer PCs pre-loaded with a
version of Linux, an alternative to Microsoft  Corp.’s Windows
operating systems.”He’s clearly not waiting around to do things,”
Jaruzelski said. “He’s certainly not being timid about moves he’s
making.”

A company of Dell’s size is bound to shed jobs in order
to cut costs, but the savings from any layoffs likely won’t improve the
company’s finances until next year at the earliest, added Philip
Durell, senior analyst at The Motley Fool.”I don’t think the Dell model
is broken, it just needs some tweaking,” Durell said. “Dell is still
Dell and that’s not going to change.”Dell issued the financial results
as a news release and didn’t offer any follow-up conference calls with
analysts or reporters. The company didn’t provide year-ago figures in
its report either.The company’s earnings statements from the second,
third and fourth quarters also remain preliminary and have yet to be
filed with the Securities and Exchange Commission because of an ongoing
federal accounting probe that found numerous errors, evidence of
misconduct and financial control deficiencies.Thursday’s report
included a charge of $46 million, or 2 cents per share, for costs
related to the investigation. Dell didn’t offer specific guidance but
said the second quarter could be tougher due to a seasonal slowdown for
the company and continued expenses related to the investigations.

Dell also hasn’t filed its annual report for the fiscal year ended Feb. 2.
Thomas
W. Luce III, chairman of the Dell’s internal audit committee, conceded
that the investigation was taking longer than expected.”Although this
process has taken us longer than we would have liked,” Luce explained,
“it is important to commit the time and resources required to ensure a
thorough and comprehensive review and resolution of all identified
issues and the implementation of appropriate remedial measures.”Without
offering a timetable, Dell spokesman David Frink said the probe was in
its final phases.Durell said he was convinced that if Dell had some
major financial restatements to make, they would have been announced by
now.”Nobody these days wants to go ahead with any of these restatements
without going through everything with a very fine-toothed comb,” he
said.

[Author]

June 4, 2007 at 10:45 AM