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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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By crystal clear on 4/1/2008 9:34:55 AM , Rating: 4
Hidden behind all those announcements, its the sub prime crisis afterall-

SAN FRANCISCO -(Dow Jones)- Dell Inc. (DELL) said Monday it is "undertaking a strategic assessment of ownership alternatives" for its Dell Financial Services division, which has ties to a commercial lender snared by the subprime crisis.

Those alternatives range from selling the financial division, which is valued at about $1 billion, to not changing a thing, a Dell spokesman said.

Dell's actions highlight how the subprime crisis has begun to snare technology companies, which are more apt to have financial-services arms like Dell's in order to lend its customers money to help finance their deals. But as the credit crisis worsens, Dell, Microsoft Corp. (MSFT), telecommunications maker Avaya Inc. and others with similar arrangements face potentially similar reckonings.

For 11 years, Dell has contracted with New York-based commercial lender CIT Group Inc. (CIT) to provide its customers with loans to finance their Dell product purchases. About a tenth of Dell's sales last year involved CIT Group in some way. While Dell bought up CIT's share of the joint venture late last year, about $455 million of the current $2.1 billion Dell has loaned to its customers was underwritten by CIT.

CIT is now reeling under the weight of its investments in subprime mortgages. Last week, CIT's future was called into question after the lender said it had tapped a $7.3 billion line of credit in order to continue day-to-day operations through the end of the year.

By aos007 on 4/1/2008 12:01:27 PM , Rating: 2
Ah, so Dell is not able to get money to finance its operations. Perhaps their hand was forced and they didn't plan for their measures to be quite so drastic.

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