Dell Issues 1,700 Pink Slips, Q4 Falls a Penny Shy
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Dell Computer Corp. Thursday cut what it called 1,700 redundant positions and, after the market closed, reported fourth-quarter earnings that fell short of consensus estimates by a penny.
While the significant number of cuts was only four percent of its workforce, the giant computer maker said it was necessary to streamline a bit. Dell claims the reductions -- mostly administrative, marketing and product-support posts -- will help its competitive push in the face of "soft global economic conditions and overall demand for computer systems."
The No. 2 computer maker posted earnings of 18 cents per share, a 16 percent increase from the same quarter a year ago. Though it only missed First Call's mark by a cent the same analyst crew lowered their expectations of the manufacturer's earnings from 25 cents per share.
Net income totaled $508 million. Dell, whose sales grew to $8.7 billion, will take a $105 million charge to cover costs related to the job reductions in central Texas and consolidation of facilities.
Acknowledging that demands for PCs and complementary products had been soft, CEO and Chairman Michael Dell said he was relatively pleased with results and said that by scaling back the company's inventory to a five-day schedule, the company correctly adjusted its cost structure with the flagging economy.
"We represented one-third of total worldwide shipment growth in the fourth quarter, and we did so profitably," Dell said.
Dell actually compared its relative success to its competitors, noting that it managed to keep market share while the majority of rivals lost it during the quarter.
Dell also recently pared its temporary staff from 3,200 to less than 2000 per week a week ago.
Before the latest cuts, Dell employed 22,000 people in central Texas and 40,200 worldwide. Company operations in Middle Tennessee and international locations were not affected by Thursday's action.
closed up 2-1/16 at 25 prior to the earnings report.