Dell to cut about 6,650 jobs due to falling PC sales
(Bloomberg) — Dell Technologies Inc., facing a sharp drop in demand for personal computers, will cut about 6,650 jobs, becoming the latest technology company to announce thousands of layoffs.
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The company is facing market conditions that “continue to crumble due to an uncertain future,” co-CEO Jeff Clarke wrote in a memo reviewed by Bloomberg. The reduction is about 5% of Dell’s global workforce, according to a company spokesperson.
After the PC boom in the pandemic era, Dell and other hardware manufacturers have experienced a drop in demand. An industry analyst at IDC said preliminary data shows personal computer shipments dropped sharply in the fourth quarter of 2022. Among large companies, Dell saw the largest decline, down 37% from the same period in 2021, according to IDC. Dell gets about 55% of its revenue from PCs.
Clark told workers that past cost-cutting measures, including hiring suspensions and travel restrictions, were no longer enough. The reorganization of the department, along with job cuts, is seen as an opportunity to improve efficiency, the spokesman said.
Layoffs have hit the tech sector in recent months, including many of Dell’s peers and competitors. HP Inc., also associated with the PC market, announced in November that it would lay off 6,000 employees. Cisco Systems Inc. and International Business Machines Corp. announced that they would cut about 4,000 workers. The tech sector announced 97,171 job cuts in 2022, up 649% from the previous year, according to consulting firm Challenger, Gray & Christmas Inc.
Following the downsizing, Dell’s headcount in Round Rock, Texas will be at its lowest in at least six years – about 39,000 fewer employees than in January 2020. Based on March 2022 filing data.
Dell reported a 6% decline in sales for the period ended Oct. 28 and gave a earnings forecast for the current quarter that fell short of analysts’ estimates, saying customers are cutting back on their IT purchases. The company is expected to provide more information on the financial impact of the job cuts when it releases its fourth-quarter financial results on March 2.
“We used to get through economic downturns and get stronger,” Clarke wrote in a message to employees. “We’ll be ready when the market recovers.”
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