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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 4/14/2008 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.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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