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Dell planning job cuts as PC demand jumps off a cliff

Memo tells staff freeze on hiring and travel expenses are no longer enough

Dell is said to be planning to cut thousands of jobs, potentially as much as 5 percent of its entire workforce, in response to the falling global demand for PCs.

The Texas-based technology giant confirmed there would be layoffs this morning, although it did not specify numbers. Vice chairman and co-chief operating officer Jeff Clarke said in a post today that the company would be "aligning Regional Sales and Dell Technologies Select teams", integrating "support services into ISG and CSG", and shifting ISG engineering "teams and resources to ... priority offerings." He also confirmed: "Unfortunately, with changes like this, some members of our team will be leaving the company."

He added: "There is no tougher decision, but one we had to make for our long-term health and success. Please know we'll support those impacted as they transition to their next opportunities."

According to Bloomberg, the company is set to lay off about 6,650 of its workers. The newswire cited a memo sent by Clarke to staffers blaming economic conditions which "continue to erode with an uncertain future."

Clarke reportedly told workers that previous cost-cutting measures employed, such as putting a hold on new hires and limiting travel, are no longer enough. The layoffs, along with departmental reorganizations, present the company with an opportunity to drive efficiency, he said.

We asked Dell about the job cuts, but the company declined to confirm the number, stating: "We continuously evaluate operations to ensure the right structure is in place to provide the best value and support to partners and customers. This is part of our regular course of business."

Dell is not be the first tech company to shed workers in the economic downturn. PayPal said last week that it intends to cut about 7 percent of its workforce, or around 2,000 jobs, while IBM announced last month that it intends to lose about 3,900 employees and Amazon is also set to eliminate more than 18,000 jobs.

The slump in demand for PCs has hit many system builders hard, with recent figures from IDC indicating that the number of computers shipped globally in the fourth quarter of 2022 was down by 28.1 percent on the same period a year earlier.

As The Register reported, Lenovo was down 28.5 percent to 15.5 million units, HP saw a fall of 29 percent to 13.2 million, ASUS was down 20.9 percent, and Apple also saw a decline of 2.1 percent to 7.5 million. However, Dell appears to have been worst hit, with a drop of 37.2 percent to 10.8 million units.

This was the fourth straight quarter of decline for the PC industry, with shipments for the full year down by 16.5 percent to 292.3 million, according to IDC.

We may learn more about the layoffs from Dell's next earnings announcement, scheduled for March 2. The previous results in November for the third quarter of its fiscal 2023 saw revenue down 6 percent to $24.7 billion, while the figures for its Client Solutions Group that builds and sells PCs and laptops showed revenue of $13.8 billion, down 17 percent on the same period the previous year. ®

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