Dell Computer Corp. said Thursday it is
cutting 1,700 jobs in response to slowing personal computer sales,
which have stalled profit growth at the nation's leading PC seller.
Dell had never before announced job cuts in its 16-year history.
The company said it would eliminate nearly 8 percent of its
22,000 jobs in Central Texas at headquarters in Round Rock, Texas,
and nearby Austin. Cuts were made in regular full-time positions,
mostly in administration, marketing and product support, the
"Many of the reductions involve positions made redundant by the
recent reorganization of several Dell business units," the company
said in a statement. "Others are the result of Dell's lower
expectations for industry and company growth."
In trading Thursday morning, Dell shares rose $1.83, or 8
percent, to $24.77, helped by a boost overall in technology stocks.
Layoff rumors have been swirling for weeks, but chief executive
Michael Dell refused to comment on the reports last week.
"Our company is definitely healthy. I mean this is a
competitive environment," Dell told The Associated Press last
week. "Dell is a business that competes to grow and get market
share, but let's be clear: This is a more challenging economy than
we had, let's say a year or two ago."
Faced with sluggish growth in personal computer sales and an
overall slowdown in the U.S. economy, Dell had already imposed a
hiring freeze, reduced its marketing budget and limited travel
Last week, Dell announced it was shutting down its 4-month-old
online marketplace, where Dell and other companies sold their
products over the Internet to other businesses.
Last month, the company warned that a slowing economy and
diminishing demand for PCs and services would reduce expected
fourth-quarter earnings and revenue.
The company said it expects earnings to be 18 cents or 19 cents
per share; analysts surveyed by First Call/Thomson Financial
originally had pegged earnings at 25 cents per share.
Revenue for the fourth quarter will total $8.5 billion to $8.6
billion, 1 percent to 2 percent lower than first expected, the
Dell has about 40,200 worldwide, including at a manufacturing
plant in Tennessee. The layoffs only affect Central Texas workers,
the company said.