Dell is taking $700m hit

The price of slashing workforce

Dell is going to take a hit of $700 million in Q2 for slashing jobs and the other measures its taken to stay sharp during the PC market slowdown.

It expects to post sales of $7.6 billion for the quarter ending 3 August, which is in line with what its already said will happen. Earnings per share will be 16 cents before the $700 million charge is taken into account.

Back in May Dell said it would take a one off hit of $250-$300 million to pay for 4000 or more job cuts and plant closures - so the $700m charge is a lot steeper than anticipated.

But even though PC sales are sluggish, Dell reckons it's outperforming all its rivals. Strip out Dell's sales and the US PC market performed even more horribly in Q1 than everyone thought. Speaking in Zurich in June, CEO Michael Dell noted that US sales fell 8 per cent year-on-year in Q1, but exclude Dell, and sales fell a whopping 18 per cent. ®

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