Dell Computer Corp. disclosed plans Monday to eliminate up to 4,000 more jobs, a cutback move that comes just three months after 1,700 employees were let go in an earlier round of layoffs.
Citing a cautious business outlook because of the softening economy and its impact on IT spending, Dell said it also would implement a series of other cost-cutting actions. That includes consolidating management layers in engineering, sales and other departments and requiring most salaried employees in the U.S. to take unpaid time off.
Dell said 3,000 to 4,000 full-time employees will be cut between now and early November as part of the new cutbacks. The computer maker’s 38,500-employee workforce would be reduced by just over 10 percent if the maximum number of targeted positions are eliminated.
The reductions will be made in part through normal attrition, according to Dell. But the company said it plans to take a pre-tax charge of US$250 million to $350 million in its just-started fiscal second quarter in order to pay costs associated with the job cuts and a related facilities consolidation.
As part of Monday’s announcement, Dell said it expects to meet earlier projections of $8 billion in revenue and a profit in the $440 million range for the first quarter that ended last Friday. Operating profit margin during the first quarter was “slightly higher” than anticipated, the company added.
But Dell said it’s continuing to aggressively control expenses because of “soft overall demand for computer systems and services.” In addition to the new workforce reduction and the other internal changes, the company said it’s “significantly” limiting its hiring of new employees.
Dell announced its first-ever layoffs in February, saying it was cutting four per cent of its employees in a move that came just hours before the company reported fourth-quarter results that were well below its original expectations. That in turn followed an earlier cost-cutting move in which Dell abruptly shut down a four-month-old business-to-business exchange.