Dell drops 900 staff in comeback strategy

1 Apr 2008

Shortly after analysing its business productivity and efficiency and declaring it had “a US$3bn opportunity” to improve its situation, Dell has announced its decision to cut 900 jobs by closing a plant in Austin, Texas.

The Texas facility manufactures desktops and its closure is no surprise given the computer world’s movement towards mobility. It was a decision Dell cited as “part of a broader assessment of its global manufacturing and logistics network”.

The company said it will begin focusing on five key areas: global consumer, enterprise, notebooks, small and medium enterprise (SMEs) and emerging countries. However, desktops may not be the only sector to suffer as the firm also hinted at selling its finance service, which provides customers with financing options when purchasing Dell products.

“The company also announced it is undertaking a strategic assessment of ownership alternatives for its Dell Financial Services financing activities,” said the official statement released late yesterday.

While this assessment will mostly focus on financing options for SMEs and the consumer in the US, Dell said it could possibly affect commercial leasing too.

Although Dell recently began expanding its consumer base in Europe, starting with the retail market through sales via Currys, Dixons and PC World outlets, it has had a tough year overall. Results were weak for the quarter ended November 2007, when consumer sales across the US dropped by 6pc year-on-year.

Desktop sales currently account for 30pc of Dell’s overall sales. However, given the closing of the Austin plant and 900 job cut, this figure will most likely decrease significantly over the coming year.

By Marie Boran