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News
Dell cuts staff
May 7, 2001: 5:08 p.m. ET

No. 1 PC vendor expects to make quarterly targets, sets job cuts
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NEW YORK (CNNfn) - Dell Computer Corp. on Monday said it will lay off as many as 4,000 employees as it struggles in a difficult market.

The world's largest supplier of personal computers also said it will meet the Street's sales and earnings expectations for its most recent quarter when it reports the results next week.

Dell said it expects to report a profit of 17 cents per share on sales of $8 billion for its fiscal first quarter, which ended on Friday. That's in line with the consensus estimate of analysts polled by earnings tracker First Call. The company offered those same assurances early last month.

Last week, Tom Meredith, Dell's senior vice president of business development and strategy, told investors at a conference in New York that the company would be "ruthless" in how it addresses its cost structure going forward.

The latest round of layoffs, which the company said will take place over the next two quarter, is the second the company has made recently. In February, it announced its first-ever large-scale layoffs, cutting 1,700 jobs.

Dell said slowing PC industry growth is requiring it to downsize its work force but at the same time streamline its organization after several years of rapid expansion.

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"Dell is refining its cost structure to profitably gain share in a challenging marketplace and best position itself for eventual economic and industry improvement," the company said in a statement.

The company said it is focusing on eliminating management layers and sharing support services across its various operating units. The company also said it will consolidate certain manufacturing operations, but it did nor provide specific details.

Dell said the job cuts will come from its central Texas facilities and be achieved in part through normal attrition. A Dell spokesman said the layoffs will affect employees at all levels, with an emphasis on management.

The company said it expects to take a one-time pretax charge ranging between $250 million and $350 million against its second-quarter earnings related to the layoffs and consolidation of facilities.

Dell is expected to report its fiscal first-quarter results and provide forecasts for the second quarter next Thursday.

Shares of Dell (DELL: up $0.07 to $25.91, Research, Estimates) rose 7 cents to $25.91 on Nasdaq ahead of the news, which was released after the close of trading. They rose 73 cents to $26.64 in extended-hours trade. graphic





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