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Dell ditches 1700 staff

Job cuts hit Texas - other sites safe for now

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Updated Dell is making 1700 employees at its Texas HQ redundant in a bid to cut costs. The cuts mark the first terminations the company has made in its long history.

The announcement of the move comes just hours ahead of the company's Q4 2001 results, which suggests the job cuts are as much about boosting investor confidence as anything else. Certainly, the results are not expected to be good: last month Dell issued a profit warning, claiming that it now expects earnings of 18-19 cents a share for the quarter. That's well down on the 26 cents a share it had previously predicted.

Dell lowered sales targets for the period to $8.5-8.6 billion - up 25-27 per cent from a year ago, but down from its earlier forecast of $8.7 billion.

Dell itself describes the redundancies as merely part of an "ongoing refinement" of its business. We're sure the company could use some refinements, but we doubt the 1700 admin, marketing and support staff about to get pink slips will be too happy about it.

The 1700 job losses amount to just under eight per cent of Dell's Texas workforce and just over four per cent of its worldwide headcount. Dell currently employs 40,200 around the globe, some 22,000 of them in Texas.

The cuts are at least lower than recent forecasts had predicted. Client Server News last week said that 2000-3000 staff would be given the boot locally, with 4000 more being dismissed from Dell's international sites.

Dell said "company operations in Middle Tennessee and international locations are not affected by today's action", which suggests - but doesn't make certain - that the company's remaining staff are safe. Unless, we'd say, Dell's sales and earnings continue to fall.

A Dell employee who's just been laid off has written to us. Here's what they said:

"This is actually the second wave of layoffs this week. Last evening, all of Dell's temporary workers in Round Rock had their contracts ended, and were escorted off campus by manager and security escorts. I saw no incidents, and the victims I spoke to were upset, but not surprised.

The permanent employees have been handled differently. Victims have been approached individually and privately. I was offered a quite generous severance package, covering my salary and medical insurance for sixty days. I have also been put in touch with a placement firm that Dell has retained.

For the past several weeks, all of us in Round Rock had been hearing the rumours, and expected to be fired "with cause" for minor infractions or poor performance. While I am relieved that that has not been the case, I am very saddened to have been chosen after four years of solid, occasionally brilliant, performance.

Dell has also announced by now that their operations in Tennessee and abroad will not be affected; only their oldest and most experienced, here where the company started. I feel that this is an error in judgement.

I am not angry. I am sad in the way that one might feel when kicked out of their home at seventeen. I have been put up in a hotel and rented a car, so to speak, but where will I go now? I worry for the teammates and friends left behind and for the company in general. Dell has been the best employer I have had in seven years in the IT field, and I do not know if I will find another who will feel like family, like home." ®

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