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Dell to cut 6,650 jobs as PC demand slows

Layoffs persist in technology industry by Brody Ford Bloomberg News (WPNS) | February 7, 2023 at 2:31 a.m.

Dell Technologies is cutting about 6,650 positions as the company faces plummeting demand for personal computers, becoming the latest technology giant to announce thousands of job cuts.

The head-count reduction amounts to about 5% of Dell's global workforce, the company said in a regulatory filing early Monday. Dell is experiencing market conditions that "continue to erode with an uncertain future," Co-Chief Operating Officer Jeff Clarke wrote in a memo viewed by Bloomberg.

After an early covid-19 pandemic PC boom, Dell and other hardware-makers have seen cratering demand of late. Industry analyst IDC said preliminary data shows PC shipments dropped sharply in the fourth quarter of 2022. Among major companies, Dell saw the largest decline -- 37% compared with the same period in 2021, according to IDC. Dell generates about 55% of its revenue from PCs.

Clarke told workers that previous cost-cutting measures, including a hiring pause and travel limits, are no longer enough. The departmental reorganizations, along with the job reductions, are viewed as an opportunity to drive efficiency, a company spokesperson said.

The move "affirms our expectation of a delayed PC rebound in 2023 and suggests further sales erosion in the company's client solutions group, especially in 2H," Woo Jin Ho, senior analyst at Bloomberg Intelligence, said in a note.

"Though we calculate the move could cut annual expenses by $700 million-$1 billion, helping to preserve margin and limiting the dent to EPS, Dell still faces limited visibility in PC demand," Jin Ho wrote.

Layoffs have hammered the tech sector in recent months, including many of Dell's peers and competitors. HP, similarly exposed to the PC market, announced in November a reduction of as many as 6,000 workers.

Cisco Systems and IBM each said they would eliminate about 4,000 workers. The tech sector overall announced some 97,000 job cuts in 2022, up 649% compared with the previous year, according to consulting firm Challenger, Gray & Christmas.

After the layoffs, the head count for Round Rock, Texas-based Dell will sit at its lowest level in at least six years, with about 39,000 fewer employees than reported in January 2020, before the company spun out its stake in VMware.

Only about one-third of Dell's employees are based in the United States, according to a March filing.

The company reported a 6% sales decline in the period that ended Oct. 28, offering a revenue forecast for the current quarter that fell short of analysts' estimates. The company is expected to provide further information on the financial impact of its job cuts when Dell reports fiscal fourth-quarter results March 2.

"We've navigated economic downturns before and we've emerged stronger," Clarke wrote in his note to employees. "We will be ready when the market rebounds."

Overall in the sector, tech companies started 2023 with a wave of job cuts -- some 50,000 in January alone -- and there doesn't appear to be any letup this month.

Here is a snapshot of staff cuts by major tech companies in recent months:


Amazon: The e-commerce company said it would cut about 18,000 positions, a fraction of its 1.5 million-strong global workforce.

Salesforce: The company said it would cut 10% of its workforce, about 8,000 employees.

Coinbase: The cryptocurrency trading platform said it would cut about 20% of its workforce, or about 950 jobs, in a second round of layoffs in less than a year.

Microsoft: The software company said it will cut about 10,000 jobs, almost 5% of its workforce.

Google: The search engine giant said it would lay off 12,000 workers, or about 6% of its workforce.

Spotify: The music streaming service said it would cut 6% of its global workforce, not specifying a number of jobs. Spotify reported in its latest annual report that it had about 6,600 employees, which implies that 400 jobs would be cut.

SAP: Germany-based SAP, Europe's biggest software company, said it would cut up to 3,000 jobs worldwide, or about 2.5% of its workforce, after a sharp drop in profits.

PayPal: The digital payments company said it would cut about 7% of its total workforce, or about 2,000 full-time workers, as it contends with a challenging environment.


Twitter: The social media platform cut about about half of its 7,500-strong workforce after Elon Musk bought the company for $44 billion in October.

Lyft: The ride-hailing service said it would cut 13% of its workforce, nearly 700 employees.

Meta Platforms: The parent company of Facebook said it would lay off 11,000 people, about 13% of its workforce.


Snap: The parent company of social media platform Snapchat said it would cut 20% of its staff. Snap's staff has grown to more than 5,600 employees in recent years, and the company said at the time that even after laying off more than 1,000 people, its staff would be larger than it was a year earlier.

Robinhood: The company, whose app helped bring a new generation of investors to the market, said it would cut about 23% of its staff, or about 780 people. An earlier round of layoffs last year cut 9% of its workforce.

Information for this article was contributed by Michelle Chapman and Michael Liedtke of The Associated Press.

Print Headline: Dell to cut 6,650 jobs as PC demand slows


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