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Michael Dell, Dell’s chairman and CEO.  (Source: Dell)
Dell takes steps to save $3B USD over the next three years

Dell is continuing its efforts to cut costs and an Austin, TX desktop manufacturing plant looks to be the latest victim. As is the case with many U.S.-based companies these days, Dell will cut jobs and rely even more on overseas manufacturing "to restore the competitive advantage of the company’s operating model."

The Austin plant closure is a part of a five-point Dell growth plan which will focus on global consumer, enterprise, notebooks, small and medium enterprise and emerging countries. By removing the Austin plant from its portfolio, Dell hopes to make a sizeable dent in the $3B in savings that it hopes to realize over the next three years.

"We believe we have a $3 billion opportunity to drive both productivity and efficiency," said Dell CEO Michael Dell. "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's insistence on reaching thing $3B figure will also come at the expense of 8,800 jobs. This is in addition to the 3,200 employees that were removed from the mix during fiscal 2008 -- 900 of which came as a result of a Canadian call center closure.

Other cost-saving measures that Dell has already taken include the closing of its 140 Dell Direct Store kiosks across the U.S. To make up for the loss of the kiosks, Dell expanded its presence in big box retailers like Wal-Mart and Staples.

"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," added Dell CFO Don Carty.

Despite the outsourcing and layoffs, Dell is moving along quite swiftly with product development. The company recently leaked its future notebook plans including the Latitude XT2 tablet and the Latitude E4200 and E4300 notebooks. The company also revealed a new, low-cost Blu-ray option for the Inspiron 1525 notebook.



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April Fools?
By kiwik on 4/1/2008 6:38:44 AM , Rating: 0
:/




RE: April Fools?
By Techiedude37 on 4/1/2008 7:24:14 AM , Rating: 5
Wow. If this is true it's an incredibly sad sad story. We're at the cusp of another depression in this nation and Dell thinks it's a great time to dump another 8,800 poor souls into the unemployment line?


RE: April Fools?
By Durrr on 4/1/2008 7:34:30 AM , Rating: 2
either they do that, or the entire company goes down? that's what sucks about public companies, they're more or less not allowed to have a ton in cash reserves for economic slowdowns such as this.


RE: April Fools?
By Master Kenobi (blog) on 4/1/2008 8:24:48 AM , Rating: 2
Microsoft always keeps a nice big cash reserve :P


RE: April Fools?
By RamarC on 4/1/2008 9:14:23 AM , Rating: 2
one of dell's problems is its name doesn't have cachet and thus can't command a price premium. it seems only apple has been able to get the mindshare that allows them to set their own pricing regardless of competitive offerings.


RE: April Fools?
By paydirt on 4/1/2008 10:10:24 AM , Rating: 4
If the government took steps to prevent companies from cutting jobs and/or outsourcing (Dell is cutting worldwide, not outsourcing), this would only hurt the economy and workers as businesses would be reluctant to open plants in the U.S. over fear that the government would tie their hands.


RE: April Fools?
By UNCjigga on 4/1/2008 12:30:40 PM , Rating: 2
Dell doesn't give 2 sh*ts about Apple nor should they--they ARE very worried about HP and Lenovo, however. Both competitors rely almost exclusively on overseas manufacturing. The fact that Dell lost the #1 PC maker position to HP this year is the primary impetus for this decision.

Previously, Dell relied on their direct channel to cut costs and undercut retailers on price. But if look at the PCs for sale at Best Buy today and compare them with Dell's offerings, price is pretty much at parity. Even with a weak dollar, domestic PC manufacturing just isn't competitive anymore (especially with desktops that offer slimmer margins than notebooks.)


RE: April Fools?
By michael2k on 4/1/2008 2:33:54 PM , Rating: 2
I think you're wrong. Consider that Apple had $500m more profit than Dell, Dell is looking at Apple (as well as HP and Lenovo).

Direct channel is now everyone's tool, so Dell needs to look elsewhere. Retail distribution brings them up on par with HP, but they need to look at design (and thus the likes of Apple) to try to outdo HP...


RE: April Fools?
By Chadder007 on 4/1/2008 10:45:44 AM , Rating: 3
The entire company will go down anyway if there is no one left here with a job to purchase their products.


RE: April Fools?
By vladio on 4/1/2008 11:44:10 PM , Rating: 2
The entire company will go down anyway if there is no one left here with a job to purchase their products == 100%


RE: April Fools?
By ThisSpaceForRent on 4/1/2008 7:36:20 AM , Rating: 5
With the falling value of the dollar this doesn't make as much sense as it would have five years ago. Not to mention the increased logistical costs associated with over seas manufacturing. I can understand the need to cut jobs, being over-staffed is worse than being under-staffed, but I just don't think this will pay off how they want.


RE: April Fools?
By JustTom on 4/1/2008 1:47:54 PM , Rating: 2
Being understaffed is not inherently better than being overstaffed. Both cause losses. Understaffed companies either lose sales because supply does not meet demand or stress equipment and personnel to meet demand. A situation where a company is slightly overstaffed is often beneficial; it gives flexible to meet unforeseen events. And it is far easier to lay people off than it is to staff and train.


RE: April Fools?
By ThisSpaceForRent on 4/1/2008 4:41:16 PM , Rating: 2
I absolutely agree with you. One of the most memorable work experiences I ever had was when I was asked how we could improve productivity. My response was simply, and to the point, "hire more people".


RE: April Fools?
By rum on 4/1/2008 10:06:40 AM , Rating: 1
Don't we have to have 2 consecutive quarters of negative growth to be considered in a recession, and we haven't been there yet.

yes the credit and housing markets are somewhat in turmoil, but that is mainly of their own doing.

We are not near a depression, yet, but if the MSM keeps up their chanting about one, they could sure create something of one.

People need to look and see the markets aren't that bad, not what the MSM tells you.


RE: April Fools?
By RjBass on 4/1/08, Rating: -1
RE: April Fools?
By JustTom on 4/1/2008 11:17:27 AM , Rating: 3
All leading economists? Hardly. All economists wouldn't agree on the color of the sky.

Do you even know what a recession is? Or a depression? Perhaps you should ask your fiance.

There has not been one quarter of negative growth let alone 2, and there certainly is not high unemployment or falling prices.

We are certainly in an economic downturn, which probably will lead to a recession but the chances of entering a depression are rather slim.


RE: April Fools?
By OxBow on 4/1/2008 11:55:03 AM , Rating: 2
It's obvious that we're in a very bad recession. Granted, the numbers for last quarter aren't out yet, but every measurement they're based on has been released and they all show up dreadfully negative. Most economists are projecting this to rival the recession of the late 70s, which I doubt many of you can remember.

Austin is going to have it bad with this. Although most of Texas was better insulated from the housing bubble, Austin was not, so they're already hurting. Drop 8,800 unemployed on the town (just about 1% of their permanent population) and it doesn't bode well at all.

There's no doubt a that you'll be seeing a whole lot of blues on Austin City Limits.


RE: April Fools?
By JustTom on 4/1/2008 1:42:45 PM , Rating: 2
``We are in a very sluggish economy that's barely growing at all, but it is not in a deep recession,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``It looks nothing like a free-fall environment.''
Stern's View

``It's clear the economy is growing little if at all,'' Fed Bank of Minneapolis President Gary Stern said after a speech at the European Economics and Financial Centre in London on March 27. ``The consensus is that it could improve in the second half. But if headwinds pick up, it could be more subdued than that.''

I lived through the recession of the late 70's, and what is going on has little resemblance to then. In 1979 the misery index – inflation + unemployment stood at 17.07, in 1980 it was 20.76, and in 1981 it was 17.97; the index today stands at 8.83.


RE: April Fools?
By bpurkapi on 4/1/2008 2:39:40 PM , Rating: 2
There are definitely falling prices. Recently a news story was run on the willingness of big box stores to negotiate prices. I don't think we are that bad off, but certain sectors are freaking out. What worries me is the future of our economy, people have houses with less equity, cars that still chug gas, and debt up to their ears. These are all problematic. Factor in a weak dollar and rising prices for fuel, food, and education. The US economy is at a critical moment where things could easily move towards a recession. Global competition for jobs also makes getting out of a recession difficult.


RE: April Fools?
By omnicronx on 4/1/2008 11:34:36 AM , Rating: 2
Get your head of the dirt, just because some economists have predicted a full blown recession doesn't not mean it will happen, and it sure as hell has not hit that point as of yet.

Open your eyes are realize at best they are making an educated guess. They are wrong just as much as they are right and Most of the time you will have just as many people arguing against as for.

Don't get me wrong the economy is on a downslope, but its far from the 'get your head out of the sand, we are already in a major depression' that you are making it out to be.


RE: April Fools?
By rum on 4/1/2008 12:31:22 PM , Rating: 2
Wow get rated down because your so called economists and fiance say differently than I do??

Gee the economists I have read articles from say we aren't in a recession yet, and it would have to be a lot worse to hit a depression.

We aren't even close to the double digit inflation, gas lines, unemployment of the Carter Administration. NO WHERE NEAR IT.

I wouldn't be taking too much advice from your Fiance if she is claiming we are heading into a depression, when all our economic indicators are all better than they were in the late 70's during Carters Administration.

Yes I was around then, and I remember the gas lines and people complaining because gas hit 70 cents a gallon. Lets not forget the gas rationing and the heavy duty inflation that kept the economy down. People were just happy to have a job then.

It is sad to see another American company closing down shop in America to run to a foreign country to get cheaper labor, but that isn't a sign of recession it is a sign of greed, that started back during the Clinton administration of the 90's.

If you are going to talk doom and gloom, you should make sure that there is doom and gloom abounding about, and not political rhetoric from any side to get one side in power.


RE: April Fools?
By FITCamaro on 4/1/2008 2:26:51 PM , Rating: 2
quote:
including my fiance


Ah well that must make it true....my imaginary dog says we're not so does that count as much as her vote?

The fact is it has been shown that 90% of what determines what happens is what people are made to believe will happen. If the media makes people believe we are in a recession (as they're happy to do because bad news is good news), we'll likely go into one. If they don't, then we're less likely to. Breeding fear that everything is about to collapse will cause it to because everyone will stop doing things. I'm not saying to go out and take every risk you can, but I don't think people need to stop investing, stop shopping entirely, etc.

One thing that I do think could actually worsen things is the Democrats repealing the tax cuts. One because it means those of us who actually pay taxes will have less to spend. Two because it means we have less to invest. And three because it will also repeal some of the cuts on the capitol gains tax which further discourages investing.

People's votes will determine that though. So if you like getting less of your paycheck (or don't care because hey, you don't pay taxes anyway), vote for Obama, Hillary, and any other Democrat in favor of repealing the tax cuts.


RE: April Fools?
By Ringold on 4/2/2008 10:08:43 PM , Rating: 2
JustTom said everything I'd of said, so no point rehashing that. To JustTom: Democrats, liberals, and other extremists, unfortunately, are not interested in statistics, historical comparisons, or anything else -- unless it serves their purposes. :(

I got on the horn with my life-long Democrat mother earlier today, and mentioned the positive ADP jobs report for March; "I don't want to hear that right-wing propaganda."

quote:
The fact is it has been shown that 90% of what determines what happens is what people are made to believe will happen.


FIT, read this:
http://www.foxnews.com/story/0,2933,343671,00.html

The power of the MSM is.. depressing. Those people have the OP eating out of the palm of their hand.


RE: April Fools?
By eye smite on 4/1/2008 3:28:20 PM , Rating: 1
I've made noise about this on DT before and was called narrow minded and racist and everything else. Why the hell is it so hard for Ameridcan companies to give America people jobs? They're just greedy as hell, you know Dell is making plenty of money, but they want more and they fluff it up by calling it a business decision. So here goes another 8800 jobs in the name of greed. If you suck so bad at making profit in an ethical manner, why the hell are they letting you run the company.


RE: April Fools?
By dever on 4/2/2008 3:17:54 PM , Rating: 3
I think you've "caught hell" because you make statements like this. Here are a few flaws in your statements.

1) Jobs aren't "given" away. It's not a lottary.

2) Greed is a stupid term that implies some moral superiority on your part. If Dell is excercising force or fraud to increase profits, this would be "greedy." If they are using fraud (which this is not), then they are doing something illegal and should be punished. As for force, this is a form of greed restricted to government use.

3) If you consider price as one of the determining factors of a purchase, such as a computer, then you are "greedy" by your definition, and have contributed as much toward laying off workers as the company management.

4) "making profit in an ethical manner" What? Is it ethical for the company to retain a few workers until the company fails and they all lose their jobs? Is it ethical to deny business owners the freedom to make basic business decisions?

5) The logical conclusion to your assinine assertions is some sort of communist or fascist regime where control over private industry is centralized. Why not visit Cuba... I hear you can use a computer now. You just can't afford to buy one because of too much "job security." Isn't government control grand?


RE: April Fools?
By SixDixonCider on 4/1/2008 7:43:12 AM , Rating: 2
It's gotta be an April Fools joke. everywhere else im reading 900 jobs. I live in Austin, and I have alot of friends who rely on thier jobs at both Austin and Round Rock locations. Although the pay and benefits are amazing, every Austinite knows there is no job security at Dell.


RE: April Fools?
By SixDixonCider on 4/1/2008 7:54:10 AM , Rating: 2
...I stand corrected. 900 locally. 8,800 globally.


RE: April Fools?
By FITCamaro on 4/1/2008 9:36:59 AM , Rating: 3
One day companies will wake up and realize that they've fired all the people who were supposed to buy their products and don't have any money to do so.

We are the world's biggest consumer. Laying us off means you won't make any money from us since we won't have any.


RE: April Fools?
By crystal clear on 4/1/2008 10:55:05 AM , Rating: 2
Employment holds the key to the U.S. economy because jobs mean paychecks, paychecks mean consumer spending, and spending accounts for about 70 percent of the economy.


RE: April Fools?
By UNCjigga on 4/1/2008 12:32:00 PM , Rating: 2
quote:
we are the world's biggest consumer
Nope, that's China and India now.


RE: April Fools?
By FITCamaro on 4/1/2008 2:16:01 PM , Rating: 2
Not yet they're not. They're the largest potential consumers. Lots of people does not mean they're all buying manufactured goods. The vast majority of people in India and China still live in poverty and buy only the essentials of life(food, clothing). Assuming they even buy those.


RE: April Fools?
By CorporateSlave on 4/5/2008 9:30:18 AM , Rating: 2
The truth about China? They manufacture most of our goods and they can get buy most of this cheaper than we can, either black market or otherwise.

Plus the relationship with China is changing. It used to
be us holding the hammer. Now, China is pulling strings.
That is why you see many companies looking for alternate
locations for manufacturing.


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