Dell plans to slash 8,800 jobs, cut $3 billion in costs

Dell reported an $11.6B profit last year, but the company apparently isn't satisfied -- it just announced a plan to shave off $3B in costs over the next three years. As you'd expect, it's going to take a little more than off-brand soda and thrift store uniforms to achieve the squeeze: 6,500 jobs are due to be eliminated (on top of 3,200 already cut) and a desktop manufacturing plant in Austin is scheduled to close as well. The big chunk, however, is going to come putting the squeeze on design, manufacturing, and logistics, as well as cutting component and material costs across all Dell product lines. That's the part that has us a little worried, actually -- we're fans of new Dells like the XPS M1330, here's hoping this doesn't mean a return to beige boxes.

[Via Yahoo]

[dataminer49er @ Apr 1st 2008 3:51PM]

Dude, you got a pink slip.

[Kamokazi @ Apr 1st 2008 3:55PM]

I know 8,800 people who are hoping you next comment says, "April Fools".

[dataminer49er @ Apr 1st 2008 4:17PM]

No it won't be. At least their company stock didn't tank like Bear Stearns. Would you like to be out of a job or out of a job and your 401(k) worth 90% less than the week before?

[phanbouy @ Apr 1st 2008 4:19PM]

i'd like to be the CEO of Bear Stearns where i get a golden parachute and/or white house bailout regardless of what we do!

[Mr.Tech @ Apr 1st 2008 8:40PM]

I can't believe Dell is dropping 8,800 jobs. I'm really disappointed in Dell because their doing so well and yet their dropping 8,800 jobs because they want to impress their stock investors? I'm going to Asus for my new laptops now, cya. That includes you too Alienware.

[phanbouy @ Apr 1st 2008 3:53PM]

Dell's the new GM. Who knew?

[Kris120890 @ Apr 1st 2008 3:56PM]

How Can a Company be unhappy about an 11.6Billion profit this must be a wind up like this copy and Paste peolpe copy and paste http://crave.cnet.co.uk/mobiles/0,39029453,49296269,00.htm

[phanbouy @ Apr 1st 2008 4:35PM]

did you just have an aneurysm?

[Ashwin @ Apr 1st 2008 4:46PM]

Dell did not actually make $11.6 billion in profits. Factoring in all their non-parts expenses, they only made $2.95 bilion. http://finance.google.com/finance?fstype=ii&q=NASDAQ:DELL

[Dook_In_The_Urinal @ Apr 1st 2008 5:12PM]

@phanbouy
I'm thinking a seizure.

[World's Most Beautiful @ Apr 1st 2008 4:09PM]

.
Present and future society have to come to the sad inevitable realization that as hi tech and business productivity technology and outsourcing advances - there will be less need for Human capital in terms of task workers, knowledge workers and low level supervisors.


On the plus side, we get things at a relatively cheaper price than we would normally pay.

Whether the benefits outweigh the cons is ultimately up to the voters and the consumers to decide

[Fred @ Apr 1st 2008 4:11PM]

April Fool's?

[Eric @ Apr 1st 2008 4:12PM]

Michael Dell should close up the company and give the money back to investors. :-D

This is the business model everyone keeps telling Apple they should follow. Hmmm...I'm not quite feeling that...

[phanbouy @ Apr 1st 2008 4:41PM]

replacing "Bill Lumbergh" with "Michael Dell" in almost every instance in Office Space and it still makes sense =)

[retro77 @ Apr 1st 2008 4:13PM]

...long pause.....april fools?

[Samurai Jack @ Apr 1st 2008 4:15PM]

Someone has to say it...

Looks like Michael Dell is shutting down the company and giving the money back to the shareholders.

Ah, sweet schadenfreude! I bet you regret saying that now, huh Mike?

[Elias @ Apr 1st 2008 4:22PM]

Dell made $11.6B in profit last fiscal year not last quarter.

[rock99rock @ Apr 1st 2008 4:22PM]

"The big chunk, however, is going to come putting the squeeze on design, manufacturing, and logistics, as well as cutting component and material costs across all Dell product lines. That's the part that has us a little worried, actually -- we're fans of new Dells like the XPS M1330, here's hoping this doesn't mean a return to beige boxes."

Yea, im really worried about that too. Who cares about the jobless! Soup Kitchens FTW!

Seriously?

[marc @ Apr 1st 2008 4:26PM]

This is going to have ripple effect throughout the South Central Texas economy. They've been building their laptops overseas for years, so this is more of a trend than a surprise. Globalism is rearing it's ugly head again.

[phanbouy @ Apr 1st 2008 4:28PM]

now we need a movie based there called Boyz in the Hood 2.

[benjesuit @ Apr 1st 2008 4:31PM]

Sad news for the people losing their jobs.

Desktop box form factor is steadily declining. In the very near future desktops will be an enthusiast only computer form factor. I mean really, just how far can you go with SLI/crossfire? the watt limit is closing in faster than they can make them more power efficient. Probably good news for PC gaming as more games will be made satisfyingly playable on notebook specs. The notebook is an awesome platform for lan gaming and ad hoc wifi multiplayer.

I fear for Dell quality and customer service. It's been going down for a while now. The three Dells lappies I own, have worked like champs. But I'm one of the lucky ones considering all the horror stories.

Dell might want to consider becoming a niche player and don't worry about getting back to the number one spot.

And update that XPS 2010. It's a fossil. :)~

[makishima @ Apr 1st 2008 4:37PM]

Bummer for everyone involved

[Miker @ Apr 1st 2008 4:46PM]

I don't think this would be an April Fool...it would be in extremely poor taste if it was.

Who wants a bet that not one of those redundancies will my in upper management positions (you know the ones that make the decisions without really knowing what it's like to actually work at ground level and be expected to now do the work of 5 people for no more money because the company is greedy).

[steedums @ Apr 1st 2008 4:47PM]

I was dissapointed with the build quality of my last dell. It had an extra screw floating around in it. I've never had that in a computer before

[antiver @ Apr 1st 2008 5:04PM]

Yikes, and I was about to apply for an internship.. I guess I'll have to rethink that.

[Tim @ Apr 1st 2008 6:50PM]

why? they'll need cheap replacements!

[potato @ Apr 1st 2008 5:11PM]

"The big chunk, however, is going to come putting the squeeze on design, manufacturing, and logistics, as well as cutting component and material costs across all Dell product lines."

Uh huh. I'm sorry, but who seriously made that decision? The reason why Lenovo, Sony, and Apple are kicking ass right now is *precisely* because they make premium, well-built laptops with high-quality materials, components, and quality design (both in form and function). Dell is suffering because the low-end market is cut-throat - your consumers have no loyalty, and will flee the instant your competitor is a single dollar cheaper than you.

I learned a long time ago in my various internships that price competition is really not the way to go. Someone in some third world country (or even at home) will ALWAYS be able to trump you on cost. The best bet is to make your product truly desirable in ways others have a hard time emulating.

Dell needs to *spend* their way out of this mess. They need to throw money into developing unique hardware - like Apple has with the magnetic power cord, or Sony has with laser-etching laptop cases, or Lenovo has with their durability technology. Dell laptops are 100% identical to anything coming from HP and Gateway, and that leaves price as the only deciding factor. They need to slash logistics and production costs, but they cannot afford to slash design jobs.

[dlheritage @ Apr 2nd 2008 1:45PM]

I couldn't agree more - bad design led to crappy capacitors and poor power supplies in the OptiPlex line. Add to that the insult of "factory recall programs" that expire before customers are aware of them - and the offshore tech support and customer-lack-of-care system and it's no wonder the company is an also ran in the business.

Personally, I won't buy another Dell product ever. Buh bye!

[dmadilicutty @ Apr 1st 2008 5:10PM]

8800 jobs and only 45 of those are US jobs!

[LJKelley @ Apr 1st 2008 5:13PM]

Greedy comapnies that make a ton of profits just keep wanting more and more.

[Jeff @ Apr 1st 2008 5:20PM]

Ya they should stop trying to make money. How dare corporations try and make profit. Thats ridiculous.

The reality is DELL is getting eaten alive by its competitors and extreme measures are necessary to save the company.

[phanbouy @ Apr 1st 2008 5:19PM]

i second that. que everyone to say "ya just gotta work harder!" or "that's just how it/capitalism/profit motive is". the irony is that lobbying, being in bed with the regulators, sweetheart backroom-inked contracts, grossly overpaid execs, and other monopolistic abuses of mega-firms is a perversion of the 'free market' in every sense. hopefully enough people will wake up the commoditization of everything so that the tide turns back to competition, free enterprise, breaks for small biz / entrepreneurship, etc.

all my earlier jokes aside, this is an important article and i hope it sparks a lot of debate.

[shoeless_joe @ Apr 1st 2008 5:41PM]

The biggest operating cost is personell so let's do some math....

If the plant closing will save them $1 Billion then the 8,800 job cuts will save them $2 Billion. That means the 8,800 employees cut were making an average of $227,272 per year.

I think they'll be OK.

[YoMomma @ Apr 1st 2008 6:02PM]

good april's fool joke dell

[GreezyG @ Apr 1st 2008 6:07PM]

I worked in the building that is being closed for abot 6 years. I also visited the plant in North Carolina where they are moving all that work to. It is HUGE!! crazy HUGE! I saw this coming when I quit Dell 2 years ago.

[kdmoses @ Apr 1st 2008 6:09PM]

One more reason to stick with HP business class laptops for me.

[Math R Gud @ Apr 1st 2008 6:20PM]

Last time I checked 6,500 plus 3,200 = 9,800 not 8,800. Math R Gud!

[congrats @ Apr 1st 2008 9:52PM]

wow, you must have gone to a good school too. you try to criticize someone and do the math wrong yourself. it equals 9,700.

[Adam @ Apr 1st 2008 6:53PM]

How about cutting some of the executives' salaries and saving a few jobs????

[Rainier @ Apr 1st 2008 6:38PM]

On a totally, completely, 100% unrelated note, submitted job applications at HP's Houston office (where I work) have suddenly increased significantly...

[Big Sam @ Apr 1st 2008 7:04PM]

No April Fools here, my consulting project down there got "put on hold" today cause of this... I'm actually very happy about it :)

[BigD145 @ Apr 1st 2008 7:10PM]

This has little do to with making things cheaper. This has everything to do with keeping retail prices the same and turning a higher profit each quarter.

[arkweld @ Apr 1st 2008 9:41PM]

If Dell want to cut expenses how about trimming the lineup from the 50 or so models of latops and desktops to 4 or 5? When every unit has custom options anyway you shouldn't need that many choices to find a model that works for the consumer. Apple only have three base models and that doesn't seem to hinder their sales and they have very limited customization.

Just looking at the laptop lineup at Dell gives me a headache and that's before I look at the upgrade options.

[jbean @ Apr 1st 2008 9:57PM]

All these companies who aren't happy with billions in profits are going to be wondering why the sales numbers have dropped soon. Unemployed people aren't known for their disposible income, you doofs.

[dannyboy414 @ Apr 1st 2008 10:30PM]

Not a macboy but it makes sense. Except stupid businesses like the government, people have been turn off by their same mundane designs. While some of the new series do look nice, they haven't done anything innovative and still carry that same junk designs that sell the most w/ businesses. I remember back in 2000 hehe 2000 when I loved carrying my Dell laptop because it was cool by form factor and power; *thou heavy* it was awesome.

Not surprised by 8000 job loss hopefully they see this as a flag and do a turn around. They get more creative in design and hire a new advertising agency that'll really market and not sell sh*t like "Vegan that didn't choose green."

[phanbouy @ Apr 2nd 2008 12:46AM]

huh?

[Cassini @ Apr 2nd 2008 8:13AM]

This is the way of the world: "Who cares about people?"

It's like Rockefeller: "Just a little more..."

There's no end to greed. It's a disease of the soul.


With all these layoffs, I don't know how people are supposed to make a living. And all the while, we have a president who apparently thinks the economy is just fine. This is the time for small business.

[rawag77 @ Apr 2nd 2008 9:09AM]

So glad I quit in January. According to the Austin-American Statesman, 900 jobs will be lost when they close the manufacturing plant here. I know most of my friends from there are either lucky to have a job or were already let go. I missed a severence package, but I'd rather have a secure job. Hello government cheese!!!

[Terrence @ Apr 2nd 2008 10:23AM]

Dell is just a kit computer maker. Who cares. Computers are the same thing inside.
Intel chips and M$'s OS.
I prefer Apple and if this new was about them I'd be crapping in my drawers right now.
Dell and is just marketing and distribution. Those clowns don't make squat!!!
All Dell and the other pc trash kit makers care about is the number of units they can move. M$ on the other hand is worried about their royalties checks coming in from the sell of those systems.
Apple all the way!!!!!!!

[Ken @ Apr 2nd 2008 11:46AM]

You realize that saying M$ makes you look like a douchebag, right?