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Print 74 comment(s) - last by spluurfg.. on Apr 14 at 9:38 AM

Dell says expect more than the originally announced 8,800 jobs to be cut

Dell announced earlier this week that it would close down its Austin, Texas PC manufacturing plant and laying off 900 employees in the Austin area. Dell also said at that time that it intended to cut an additional 8,800 jobs within the company in an effort to save a total of $3 billion over the next several years.

Michael Dell, CEO and Founder of Dell, said on Thursday, “We're decreasing our head count. It's declined in the past two quarters and it will decline again in the first quarter. And we will go past the 8,800 target previously discussed as we achieve everything that I'm outlining today."

The AP reports that 5,500 Dell jobs have been cut so far with 1,000 more cuts coming this quarter. However, Dell CFO Donald Carty does say that there has been an increase in frontline personnel like sales and customer support for a net reduction of 3,200 jobs so far.

Dell isn’t alone in cutting jobs; Motorola is having its own problem with profitability and too many mouths to feed. Motorola announced recently that it wanted to break into two companies in an effort to become more profitable.

Motorola announced today that it would cut an additional 2,600 jobs adding up to 10,000 jobs cut since the beginning of 2007. The reason for the job cuts is blamed in part on the poor sales of cellular phones. The layoffs are the first wave of a plan to save Motorola $500 million this year.

The Wall Street Journal quotes Motorola from a statement saying, “The work-force reductions are intended to make financial resources available for strategic business investment, while better aligning operational costs and expenses with business growth.”

Motorola is cutting jobs both abroad and at home, 354 of the jobs cut were in Plantation, Florida where handsets for use on WiMax networks were in development. The sad state of WiMax in the U.S. with Sprint continually postponing its Xohm rollout likely had an effect on those cuts.



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RE: Here's an idea
By spluurfg on 4/4/2008 7:41:12 PM , Rating: 2
quote:
I love it how it has become expected that a companies profits should go up every year. And if they aren't, then they must be not doing something right or have too many employees. People wonder why the average engineer will change jobs almost(or more than) 10 times in their career. Because companies are constantly cutting jobs.


If you are referring to this expectation in terms of the share price, then the share price is valued as the discounted cash flow of expected dividends. Many stocks also have a built in expectation of increased profits in the future (and thus increased expected future dividends). When earnings growth slows, obviously this expectation goes away, causing the share price to become depressed. We call this speculation.

Believe it or not, the pay of senior management is typically determined by the board of directors, who are typically selected by vote of the shareholders. Restructuring plans will also not get very far without shareholder support. So blame the shareholders -- the people who own the company -- who want higher returns and think that paying a lot for senior managers and cutting costs is the way to achieve this.


RE: Here's an idea
By elgoliath on 4/7/2008 1:40:40 PM , Rating: 1
Correction, blame the shareholders that hold enough shares that they are able to vote in board members. If you don't own enough shares, you can't vote.

Interestingly you seem to gloss over the fact that the CEO's are appointed by boards comprised of wealthy friends. So, you have a board made up of friends, all of whom are in the upper echelon of wealth dispersement appointing another wealthy friend as CEO and approving a huge salary and bonuses NOT tied to how the company performs.

So yeah, lets blame the 'shareholders' for the acts of the few and their buddies that they put in power.

In my opinion, any company that does not have a 'moral' conscience is doomed to failure- the question I have is if we are going to let the failure be the end of our society or just the failure of the individual company. All those arguing for the government to get out of the free market are either in a position to be the ones in power after every thing collapses or are people in love with what others in power tell them and don't realize that a completely 'free' market will end in anarchy resulting in an even greater imbalance between the have's and the have not's.


RE: Here's an idea
By spluurfg on 4/9/2008 9:43:43 AM , Rating: 2
quote:
Correction, blame the shareholders that hold enough shares that they are able to vote in board members. If you don't own enough shares, you can't vote.

Interestingly you seem to gloss over the fact that the CEO's are appointed by boards comprised of wealthy friends.


Uh... If we're talking about a common stock in say, a US company, one share grants you one vote. Now if you own very few shares and somebody else holds very many shares, then yes, he will have much more influence over the composition of the board members which are, I repeat, elected by shareholder vote.

If these board members have a habit of selecting incompetent CEO's that happen to be their personal friends, then I suggest that the shareholders sack said board members. To learn more about this system I recommend a finance and management 101 course or a similar business principles/management book.


RE: Here's an idea
By elgoliath on 4/10/2008 3:42:29 PM , Rating: 2
Oh yes, I'll be sure to take that class- that was such an original jab (how long did it take you to come up with that one?). Reading my post again, vote should have been nominate, but I wouldn't expect someone as knowledgeable as you to catch that.

Regardless, even tho I used the wrong word, it doesn't matter as it amounts to the same thing. If you can only vote on nominations by the people/groups that hold enough shares to actually be able to nominate, then you are just choosing between a turd and a douche bag. These same douche bags and turds don't even have to be voted in by a majority which allows management to stack the boards.

The current system is far far far from perfect. Are you arguing against making it better or just jumping on the wrong use of a word even tho the context clues were enough to figure out what I was talking about?

A quick google search turned up this guy who seems to hold a similar view:
http://articles.moneycentral.msn.com/Investing/Com...


RE: Here's an idea
By spluurfg on 4/11/2008 4:33:11 AM , Rating: 2
Actually I wholeheartedly agree that the current system is far from perfect -- all I am trying to say is that shareholder antipathy is as much to blame for weak corporate governance as the system itself. Look at how much can be accomplished by strong shareholder activists like Flowers or Hohn -- whether they are helping or hurting time till tell, but it sure shakes up stagnant managers and board members. If only all minority shareholders were as interested in their ownings...


RE: Here's an idea
By spluurfg on 4/11/2008 4:38:34 AM , Rating: 2
And sorry about the jab -- I didn't really mean it that way... there are just a lot of people on DT who honestly don't know about this stuff. You're absolutely right that if there's a very fragmented shareholder base then a group of larger minority shareholders will have much more power when nominating. It's like the two party political system in the US.


RE: Here's an idea
By elgoliath on 4/11/2008 1:58:55 PM , Rating: 2
I apologize for my reaction, I wasn't in a good mood yesterday and it seems anytime someone makes an honest mistake the first response from some posters is to take a class/read this book etc. because you obviously don't know as much as they do.

Part of the problem is the same problem with capitalism in general- he who has the gold makes the rules, and they tend to only make rules that help them. I look forward to some of the reform that is being talked about so we can get some of the power back to the average citizen.

Overall though, most companies seem to be doing a good job with keeping things in check, but we only ever hear about the boards and CEO's that are outrageous, like the one agreement for the CEO to be paid for 5 years after his death (how else does crap like that get approved unless the board IS made up of cronies of the CEO?). Unfortunately, the worst offenders also seem to be the biggest companies with the most 'gold' so they make, err, their lobbyists make the rules/laws. I hope that type of stuff gets reformed to- they should have to go through their local representative just like everyone else imo.


RE: Here's an idea
By spluurfg on 4/14/2008 9:38:03 AM , Rating: 2
Not at all -- I should have worded my post more constructively.

I think shareholder activism is starting to take sway in a few examples, but so far it's been driven largely by hedge funds and private equity groups like Steel Partners in Japan or TCI in the case of CSX. The trouble is that a lot of personal and institutional investors see equity as a way to get a nice return and gain exposure to the public markets, with little intention of actively managing it -- they assume the board and management will take care of things, drive reforms and operational improvements, etc. Plus, they are too resourced strapped to function as an active investor.

This antipathy allows the sort of cronyism we tend to see these days, with massive salary packages and golden parachutes that never should have been negotiated in the first place. There's been a bit of attention drawn to this -- like Rob Nardelli who got an insane $210m golden parachute from Home Depot even though the company was suffering got appointed to be CEO of Chrysler. However, this time Cerberus, the PE group who bought Chrysler, is giving him a mostly performance based salary.

Erm, so point of ramble is that there's this big divide between how CEO's are compensated and treated in public companies and private companies -- private equity groups and hedge funds tend to drive their managers with performance based pay, and to ruffle up underperforming public companies' boards with threat of removal. This is because PE groups and hedge funds know that this is a way to drive performance and increase returns.

Public companies tend to putter along, with investors not really having the mindset that they are the stock-holding owners of the company and should be driving change in order to maximize their return, but letting the larger minority shareholders vote in their friends. It's the equivalent of not voting because you think one vote won't make a difference.


"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs














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