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Report: Dell mulls job cuts
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February 9, 2001: 5:31 a.m. ET
Computer maker reportedly to cut 4,000 employees; first cutbacks at firm
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LONDON (CNN) - Dell Computer plans to cut expenses and the PC maker may cut as much as 11 percent of its workforce, a published report said on Friday.
Round Rock, Texas-based Dell recently told managers to prepare for expense cuts of 8 to 10 percent, the Wall Street Journal reported, quoting unnamed people familiar with the directive.
Some Dell employees believe the computer maker could be preparing to eliminate up to 4,000 jobs through a combination of job cuts and an annual performance review, beginning as early as next week, the report said.
A spokesman for Dell told CNNfn late on Thursday that talk of 4,000 job cuts was "pure speculation."
Spherion, a Fort-Lauderdale, Fla.-based staffing provider that supplies Dell with factory workers, said in a conference call that a large Austin customer, which analysts believe is Dell, has reduced its staffing needs by more than 1,200 employees a week, the Journal reported in its interactive edition. Spherion declined comment to the publication.
Dell has already frozen most hiring, barred travel unrelated to sales calls, and cut some marketing programs, the Journal said.
Analysts told CNNfn they would not be surprised if the company trimmed its numbers to cut costs.
Ashok Kumar, analyst with U.S. Bancorp Piper Jaffray, said Dell has said internally it plans an 8 percent budget reduction, which could come in the form of a head count reduction.
 "Their primary costs are labor costs," Kumar said.
He said it is likely the company "raised the bar" in its recent performance reviews as a way of eliminating positions.
"Dell is taking a more aggressive look at its expense structure, and I'm hearing that they are doing their employee reviews earlier than expected and that they are being tougher than they've been in the past on weeding out those who are underperforming," said Andy Neff, analyst with Bear Stearns.
Neff speculated that the rumor is bubbling up again now because Dell's fiscal year just ended last week and said the company has tried to focus on driving down its head count in the past.
Dell reports its fourth-quarter earnings on Feb. 15. The company warned in January it expects profit of 18-to-19 cents a share for its fiscal fourth quarter ending Feb. 2, compared with Wall Street forecasts of 25 cents a share.
Also in January, PC rival Gateway announced more than 3,000 layoffs to streamline costs.
Shares of Dell fell 44 cents to $26.06 Thursday. 
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