The slumping personal computer business was hit by more bad news as Dell Computer Corp. executives announced another round of layoffs, this time cutting 3,000 to 4,000 jobs.
Round Rock, Texas-based Dell, the world's largest PC manufacturer, said Mon … the latest cuts would occur over the next six months, and mostly in central Texas. Many employees who escape layoffs will be forced to take unpaid time off, the company said.
In February, Dell announced plans to lay off 1,700.
Once-Mighty Dell Falls Flat
Job cuts were once unheard of at Dell, as double-digit gains in PC sales made it a stock market phenomenon in the late 1990s. The company expanded its work force rapidly until late last year. PC sales then went flat, and they never recovered.
"The U.S. economic slowdown is larger than we and everyone else believed even a few weeks ago, and some competitors are virtually giving their products away," Dell executives wrote in an e-mail to employees. "Reducing our employment for the second time this year is a difficult but necessary decision we didn't anticipate having to make."
Sales, Marketing & Engineering Take a Hit
Most of the layoffs will be in sales and marketing, engineering and other parts of the company located in or near Round Rock, especially in management ranks and support services, Dell spokesman T.R. Reid said.
Some manufacturing jobs also will be cut. The company said it would consolidate all notebook computer production at a plant near Nashville, Tenn., instead of dividing it between Tennessee and a plant in central Texas.
Dell said it still expects to meet its previous financial projections of $8 billion in revenue and 17 cents of earnings per share when it reports results for the first quarter on May 17. Dell said it remains "cautious" about the outlook for the rest of the year.
"Obviously, this means the business isn't getting better," said Daniel Niles, an analyst for Lehman Brothers. "They see it's going to be a rough couple of quarters, and they've got to get their cost structure in order."