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The Dell Diet

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The Dell Diet

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Dell was supposed to cut 10% of its workforce, about 8,800 jobs. That was last year’s plan. Now it’s saying it will go deeper in an effort to save $3 billion a year by 2011.

Michael Dell made the announcement Thursday at the company’s first meeting with financial analysts in three, count ‘em, three years because of the trouble it got into with the SEC.

“To be very clear,” he said, “we are not satisfied with the current state of affairs and are on a mission to fix it. There are no fixed costs at Dell. Everything is being looked at.”

So far Dell’s cut 3,200 people net and it has decided it must close the PC plant where it honed its marquee cost-conscious middleman-passing build-to-order strategy, the first time it’s ever closed a plant.

The axe is gonna fall on a desktop facility close to home in Austin, Texas and throw 900 people out of work by the end of the fiscal year.

It’s a laptop world and laptops are made in the Orient, Dell basically said.

The company expects to outsource more work to low-cost contract manufacturers and abandon some of its built-to-order cachet as it moves into retail. However, it expects to add even more custom possibilities at the high end.

Dell says it may also get out of the finance business – at least the consumer end of it and limit its credit exposure to corporate leasing arrangements.

Gee, and it’s currently depending on those self-same consumers to buy its gear at retail and extricate Dell from its plight. Dell is now in 10,000 retail; its great enemy HP is in 80,000.

Dell bought out the piece of Dell Financial Services that it didn’t own outright from the credit market-impacted CIT Group back in December

In a continued departure from its direct sales model, Dell is hoping to attract more VARs. Indirect sales currently bring in about $1 billion of its roughly $60 billion-a-year revenues.

The company expects to buy back a billion dollars worth of its stock this quarter and tap capital markets for debt financing. There are no plans, Dell said, for any big acquisitions




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