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Oracle of Delphi

Dell announces 8,000 layoffs; 1Q earnings rise

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Struggling computer company to shed 10 percent of its workforce.

DALLAS - Dell Inc. said Thursday that earnings fell slightly in preliminary first-quarter results, and the computer maker planned to lay off more than 8,000 employees over the next year as part of an ongoing restructuring.

Dell said it earned $759 million, or 34 cents per share, in the three months ended May 4. That compared with $762 million, or 33 cents per share, in the year-ago period.

First-quarter sales rose nearly 1 percent from the year ago period to $14.6 billion.

Analysts, on average, expected earnings of 26 cents per share on sales $13.95 billion, according to a poll by Thomson Financial.

Dell shares climbed more than 5 percent after the results were released.

In what has become a trend in recent quarters, Dell issued the financial results as a news release and didn't offer any follow-up conference calls with analysts or reporters. The company didn’t provide year-ago figures in its report.

Round Rock-based Dell's earnings statements from the second, third and fourth quarters also remain preliminary and have yet to be filed with the Securities and Exchange Commission because of an ongoing federal accounting probe that found numerous errors, evidence of misconduct and financial control deficiencies.

Thursday's report included a charge of $46 million, or 2 cents per share, for costs related to the investigation.

Dell also hasn't filed its annual report for the fiscal year ended Feb. 2.

Thomas W. Luce III, chairman of the Dell's internal audit committee, conceded that the investigation was taking longer than expected.

“Although this process has taken us longer than we would have liked,” Luce explained, “it is important to commit the time and resources required to ensure a thorough and comprehensive review and resolution of all identified issues and the implementation of appropriate remedial measures.”

Without offering a timetable, Dell spokesman David Frink said the probe was in its final phases.

The layoffs, which represent 10 percent of Dell's global work force of 88,100 full time and part-time employees, come as Dell struggles to regain market share after Hewlett-Packard Co. ousted it from the top spot in worldwide computer shipments last year.

In the first quarter, HP kept its lead over Dell with about 4 percent more shipments, according to tech research firms IDC and Gartner Inc.

As part of an ongoing turnaround effort led by Michael Dell, the company has undergone an executive shake up and numerous other changes to improve customer service and reclaim market share.

The company said it was reviewing costs across the board and that the job cuts would vary across geographic regions and customer segments to “reflect business considerations as well as local legal requirements.”

“While reductions in head count are always difficult for a company, we know these actions are critical to our ability to deliver unprecedented value to our customers now and in the future,” Michael Dell said in a statement.

A company of Dell's size is bound to shed jobs in order to cut costs, but the savings from any layoffs likely won't improve the company's finances until next year at the earliest, said Philip Durell, senior analyst at The Motley Fool.

“It's certainly going to make Dell leaner,” he said. “This is just part of their review of their whole operation.”

Dell didn't offer specific guidance but said the second quarter could be tougher due to a seasonal slowdown for the company and continued expenses related to the investigations.

Earlier in May, Dell broke from its long-standing direct-to-customer business model with a plan to sell computers through Wal-Mart Stores Inc., the world's largest retailer, beginning June 10. Dell also recently began selling consumer systems pre-loaded with a version of Linux, an alternative to Microsoft Corp.'s Windows operating systems.

Dell shares rose 69 cents to $26.91 Thursday, then climbed $1.44, or 5.4 percent, to $28.35 in extended trading. The shares have traded in a 52-week range of $18.95 to $27.89.

Link: http://www.msnbc.msn.com/id/18967391/

Edited by Pontiac Custom-S

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I just can't see Dell at wal-mart.

And it looks like Gateway is in trouble of disappearing all together...

Rumor is Best Buy plans to drop them in favor of more HP....

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Dude, you're gettin' a pink slip!

I use a Dell laptop and I've been very happy with it. However, my GF uses a Mac and I really like it so I think I might make the switch in a year or so.

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“While reductions in head count are always difficult for a company, we know these actions are critical to our ability to deliver unprecedented value to our customers now and in the future,”

Yeah, right. Putting 10% of your workforce out on their asses is probably just so damn difficult for you isn't it?

I'm probably getting a Mac for my next computer anyway. I've got a Dell right now and the thing has been just a lump of disappointing mediocrity.

Edited by AxelTheRed

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