Dell Technologies Inc. has reportedly announced plans to reduce its workforce still further during this financial year in an attempt to control costs.
The PC maker has cited concerns over the stagnating demand for PCs and the lower profitability of servers optimized for artificial intelligence compared to other products.
The company announced that job reorganizations, a limitation on outside hiring and other actions will result in a “continued reduction in our overall headcount” in the fiscal year, which ends in February 2025.
What Dell has said about the layoffs:
“We remain committed to disciplined cost management in coordination with our ongoing business transformation initiatives and will continue to take certain measures to reduce costs,” Dell said in a regulatory filing seen by Bloomberg.
Dell’s reasons behind the announcement:
Dell is currently focused on expanding its business of selling high-powered servers for artificial intelligence work. This new growth area has reportedly excited investors, with the company’s stock increasing by 39% this year through Tuesday’s close.
However, despite this, there is mounting concern about the profitability of equipment sold by Dell and its peers such as Hewlett Packard Enterprise Co. and Super Micro Computer Inc., as these servers require expensive computer chips made by tech giants like Nvidia Corp.
Dell has claimed that a higher mix AI servers hurt margins, despite the fact hat improved profit compared with the previous period.
Moreover, the company’s more famous business, the sale of personal computers, hasn’t rebounded as much as anticipated after a two-year slump. On August 30th, Dell reported $12.4 billion in fiscal second-quarter revenue, down 4% from the same period a year earlier and slightly missing estimates.
Thus, sales of business PCs barely changed while revenue from consumer-oriented PCs DROPPD 22% from a year earlier.
Dell’s announcement has provoked a widespread reaction on social media, with some taking the news in stride while others expressed anger and dissatisfaction with employees’ livelihoods and dignity.
