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 user 2008-04-21 at 12:56:31 pm Views: 56
  • #19683

    Dell plans further job cuts
    yesterday said it was seeking to strip out more than $3 billion of
    costs over the next four years in a move that will see the computer
    giant cut 8,800 jobs.

    The company is seeking to
    boost its profit margins after it was overtaken by its larger
    competitor Hewlett-Packard in 2007.Speaking at a presentation to
    analysts yesterday, Michael Dell, the founder of the firm, said that
    the cost-cutting measure would also include reform of its logistics
    network and outsourcing more of its manufacturing operations.A
    spokesman for the company sought to downplay fears that the programme
    signalled evidence that the group was experiencing a sharp slowdown in
    new business as the US faces a recession. He said that while the
    company had already indicated that it was “seeing some hesitancy among
    companies and how they are choosing to spend their IT dollars”, Dell
    had first discussed cost-cutting measures as early as last May

        * Dell tells its suppliers to turn green or else be blacklisted
        * Dell does U-turn on sales strategy

    is struggling to compete with Hewlett-Packard which is able to take
    more risks in the market and subsidise more of its products because of
    its very profitable printers business.One industry insider, who
    declined to be named, said: “HP can afford to use the profits from the
    printers operations to subsidise the rest of the company. It allows
    them to take more risk with designing innovative products.”He added:
    “The real problem is that product prices just keep going down. You can
    buy a Dell laptop now for less than $500. It is a brutal business and
    unless you are the market leader you really don’t have any competitive
    advantage. The likes of HP and Dell only really make money on the first
    three months, maybe six, of a new product. It’s a permanent treadmill
    and Dell has lost quite a bit of momentum.”The spokesman for Dell said
    that the company had already made a number of redundancies with 5,500
    jobs cut out of the 8,000 reduction. He refused to be drawn on what
    portion of those job cuts would be made in the US, insisting that the
    reduction programme was “global”.Dell has manufacturing facilities in
    Texas, North Carolina, Tennessee, and in Malaysia, Penang, China and
    Poland. It has already said that it is closing a manufacturing
    operation in Austin, Texas which will result in the loss of about 900

    Mike Cannon, Dell’s president for global operations, said
    that the company historically relied too heavily on its own businesses
    to design and make computers. Competitors such as HP, which unseated
    Dell as the largest personal-computer maker two years ago, typically
    use a more diversified supply chain.He said: “Instead of having one
    supply chain approach for Dell, we are going to have multiple supply
    chains.”Dell rivals such as Hewlett-Packard, IBM and Sun Microsystems
    have long-standing relationships with outside manufacturing partners,
    which often offer customers bundles of computer hardware, software and
    services. Dell, however, has been a relative outsider.Shares in Dell
    fell by as much as 2 per cent in early trading in New York, before
    paring the fall to be almost unchanged at $19.83. The stock has tumbled
    from just over $30 at the end of last year.Unemployment is rising at an
    alarming rate in the US with just under 5 per cent of the workforce out
    of a job. It is expected , by some Wall Street analysts to rise to 6
    per cent – a rate perceived by many as a sign of an automatic recession
    - by the end of the year.