Dell today reaffirmed their plan to lay off a total of 8,800 employees (the firm has already reduced headcount by 3,200 in the last nine months) in order to restore the “competitive advantage of the company’s operating model, rationalize its operations and improve profitability and cash flow.” “We believe we have a $3 billion opportunity to drive both productivity and efficiency,” said Michael Dell, Dell’s chairman and CEO. “We’ve analyzed the business and opportunity, so we know – without question – where our priorities should be. And as we’ve reignited growth in our business, we’re taking deliberate steps across the company to improve our competitive position.”
Dell today detailed additional actions in its previously announced program to restore the competitive advantage of the company’s operating model, rationalize its operations and improve profitability and cash flow.
“We believe we have a $3 billion opportunity to drive both productivity and efficiency,” said Michael Dell, Dell’s chairman and CEO. “We’ve analyzed the business and opportunity, so we know – without question – where our priorities should be. And as we’ve reignited growth in our business, we’re taking deliberate steps across the company to improve our competitive position.”
The actions Dell will take during Fiscal 2009 and beyond are expected to position the company to further accelerate growth in its five focus areas: global consumer, enterprise, notebooks, small and medium enterprise and emerging countries, while improving profitability and cash returns. As a part of a broader assessment of its global manufacturing and logistics network, the company will close its desktop manufacturing facility in Austin, Texas.
In addition, the company will take further actions to reduce total product costs across all areas, including design, manufacturing and logistics, materials and operating expenses. Dell expects that the initial benefits from these actions will begin to be realized in the second half of this fiscal year. Over the next three years, the company expects to achieve annualized savings of approximately $3 billion, and will use this benefit to strengthen its competitive position and improve profitability. The company also reaffirmed its previously announced plans to reduce global employee headcount by at least 8,800 and related operating expense. In the last nine months of the company’s fiscal 2008, it reduced headcount by 3,200, excluding acquisitions.
“We expect that these actions, along with the continuing rigor we’re applying to operating expense control throughout our operations, will result in an improved, world-class cost structure,” said Don Carty, Dell’s vice chairman and CFO.
The company also announced it is undertaking a strategic assessment of ownership alternatives for its Dell Financial Services financing activities. The assessment will primarily focus on the consumer and small/medium business revolving credit financing receivables and operations in the U.S., but may also include commercial leasing.
“We plan to look at alternatives that will strengthen the product offerings, enhance customer experience and improve DFS’ overall financial services capabilities in the most efficient way,” said Mr. Carty.
The outcome of the assessment will depend on the customer, capital and economic impact of alternative ownership structures. It is possible the assessment will result in no change to the ownership and/or operating structure. The company expects to complete the assessment in Q3 of the current fiscal year.
For more discussion of these actions, visit Dell’s Investor Relations Blog site, www.dell.com/dellshares. Additional details about these initiatives will be provided during the company’s Equity Analyst Meeting and Webcast on Wednesday, April 2 and Thursday, April 3, 2008. The meeting webcast may be viewed at www.Dell.com\investor.
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