Dell is laying off 6,650 workers as PC sales plummet

Dell Technologies Inc., the latest technology company to announce thousands of job cutbacks, is removing around 6,650 positions due to falling demand for personal computers.

Dell stated in a regulatory filing early Monday that the layoffs equal to around 5% of its global staff.

Dell is dealing with market circumstances that  “continue to erode with an uncertain future,” according to a document seen by Bloomberg.

According to a March 2022 filing, around one-third of Dell’s workforce are situated in the United States.

Dell shares were down 3.3% at 1 p.m. in New York, compared to a 0.7% dip in the tech-heavy Nasdaq 100 index.

Dell and other hardware manufacturers have noticed a drop in demand following a pandemic-era PC boom.

According to preliminary statistics from industry researcher IDC, personal computer shipments will decline dramatically in the fourth quarter of 2022.

According to IDC, Dell saw the worst loss among significant corporations, with a 37% drop compared to the same period in 2021. PCs account for around 55% of Dell’s revenue.

Clarke informed employees that past cost-cutting initiatives, such as a hiring freeze and travel restrictions, are no longer sufficient.

According to a business representative, the department reorganisations and employment cuts are considered as a chance to increase efficiency.

The move “affirms our expectation of a delayed PC rebound in 2023 and suggests further sales erosion in the company’s client solutions group, especially in 2H,” Woo Jin Ho, senior analyst at Bloomberg Intelligence, said in a note.

“Though we calculate the move could cut annual expenses by $700 million-$1 billion, helping to preserve margin and limiting the dent to EPS, Dell still faces limited visibility in PC demand.”

In recent months, the computer sector has been hit hard by layoffs, including many of Dell’s rivals and competitors.

HP Inc., which is also heavily invested in the PC sector, announced a 6,000-person layoff in November.

Cisco Systems Inc. and International Business Machines Corp. both announced layoffs of around 4,000 employees.

According to research company Challenger, Gray & Christmas Inc., the IT industry disclosed 97,171 job cutbacks in 2022, an increase of 649% from the previous year.

Dell’s workforce will be the lowest in at least six years following the decrease, with around 39,000 fewer people than in January 2020.

According to a document, Dell will sell its investment in VMware in November 2021, leaving the company with around 37,500 employees.

Dell announced a 6% drop in sales for the quarter ended Oct. 28 and a revenue projection for the current quarter that fell short of analysts’ expectations, citing customers’ reduced purchases of information technology.

When the business announces its fiscal fourth-quarter earnings on March 2, it is likely to disclose further details on the financial effect of the job layoffs.

“We’ve navigated economic downturns before and we’ve emerged stronger,” Clarke wrote in his note to employees. “We will be ready when the market rebounds.”