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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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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...

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton

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