More Layoffs for Troubled Dell

ByABC News
May 8, 2001, 7:09 AM

D A L L A S, May 8 -- The slumping personal computer business was hit bymore bad news as Dell Computer Corp. executives announced anotherround of layoffs, this time cutting 3,000 to 4,000 jobs.

Round Rock, Texas-based Dell, the world's largest PCmanufacturer, said Mon the latest cuts would occur over the nextsix months, and mostly in central Texas. Many employees who escapelayoffs 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 inPC sales made it a stock market phenomenon in the late 1990s. Thecompany expanded its work force rapidly until late last year. PCsales then went flat, and they never recovered.

"The U.S. economic slowdown is larger than we and everyone elsebelieved even a few weeks ago, and some competitors are virtuallygiving their products away," Dell executives wrote in an e-mail toemployees. "Reducing our employment for the second time this yearis a difficult but necessary decision we didn't anticipate havingto make."

Sales, Marketing & Engineering Take a Hit

Most of the layoffs will be in sales and marketing, engineeringand other parts of the company located in or near Round Rock,especially in management ranks and support services, Dell spokesmanT.R. Reid said.

Some manufacturing jobs also will be cut. The company said itwould consolidate all notebook computer production at a plant nearNashville, Tenn., instead of dividing it between Tennessee and aplant in central Texas.

Dell said it still expects to meet its previous financialprojections of $8 billion in revenue and 17 cents of earnings pershare when it reports results for the first quarter on May 17. Dellsaid it remains "cautious" about the outlook for the rest of theyear.

"Obviously, this means the business isn't getting better,"said Daniel Niles, an analyst for Lehman Brothers. "They see it'sgoing to be a rough couple of quarters, and they've got to gettheir cost structure in order."